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HORNBOOK  CASE  SERIES 


ILLUSTRATIVE    CASES 


ON 


CONTRACTS 


By  ARCHIBALD  H.  THROCKMORTON 

Professor  of  Law,  Indiana  University 


A  COMPANION  BOOK  TO  THE  SECOND   EDITION 
OF  CLARK  ON  CONTRACTS 


St.  Paul,  Minn. 

WEST  PUBLISHING    Ca 

1913 


COPTBIQHT,    1913 
BT 

WEST  PUBLISHING  COMPANY 

fTHBOCKM .  Co  NT.) 


K    S'O 


■1- 


THE  HORNBOOK  CASE  SERIES 


It  is  the  purpose  of  the  publishers  to  supply  a  set  of  Illustrative 
Casebooks  to  accompany  the  various  volumes  of  the  Hornbook  Series, 
to  be  used  in  connection  with  the  Hornbooks  for  instruction  in  the 

CO        classroom.     The'  object  of  these  Casebooks  is  to  illustrate  the  prin- 

::j^  ciples  of  law  as  set  forth  and  discussed  in  the  volumes  of  the  Horn- 
book Series.    The  text-book  sets  forth  in  a  clear  and  concise  manner 

■^  the  principles  of  the  subject;  the  Casebook  shows  how  these  princi- 
V        pies  have  been  applied  by  the  courts,  and  embodied  in  the  case  law. 

\a  With  instruction  and  study  along  these  lines,  the  student  should  se- 
cure a  fundamental  knowledge  and  grasp  of  the  subject.  The  cases 
■s^J  on  a  particular  subject  are  sufficiently  numerous  and  varied  to  cover 
the  main  underlying  principles  and  essentials.  Unlike  casebooks 
prepared  for  the  "Case  Method"  of  instruction,  no  attempt  has  been 
made  to  supply  a  comprehensive  knowledge  of  the  subject  from  the 

>ov'  cases  alone.  It  should  be  remembered  that  the  basis  of  the  instruc- 
tion  is  the  text-book,  and  that  the  purpose  of  these  Casebooks  is  to 
illustrate  the  practical  application  of  the  principles  of  the  law. 

West  Pubushing  Company. 
(Ill)* 


V. 


^ 
^ 


^. 


\:mH'i\:y 


TABLE  OF  CONTENTS 


DEFINITION,  NATURE,  AND  REQUISITES  OF  CONTRACT  IN 

GENERAL 

Pace 

I.     Agreement    1 

IL    Obligation    3 

OFFER  AND  ACCEPTANCE 

I.     Communication  by  Conduct — Implied  Contracts   6 

II.     Necessity  and  Effect  of  Acceptance  10 

III.  Communication  of  Acceptance   12 

IV.  Character,  Mode,  Place,  and  Time  of  Acceptance 18 

V.     Revocation  of  Offer  20 

VI.     Lapse  of  Offer   24 

VII.     Offers  to  the  Public  Generally  27 

VIII.     Offer  as  Referring  to  Legal  Relations  31 

CLASSIFICATION  OF  CONTRACTS— CONTRACTS  UNDER 
SEAL  AND  CONTRACTS  OF  RECORD 

I.     Classification  of  Contracts    34 

II.     Contracts  of  Record   36 

III.  Contracts  under  Seal    40 

1.  How  Contracts  Under  Seal  are  Made   40 

2.  Characteristics  of  Contract  Under  Seal  43 

CONTRACTS  REQUIRED  TO  BE  IN  WRITING— STATUTE 
OF  FRAUDS 

I.     In  General — Executed  Contracts 54 

II.     Contracts  within    Section  4    56 

1,  Promise  by  Executor  or  Administrator   56 

2.  Promise   to   Answer   for   Debt,   Default,   or   INIiscarriage   of 

Another     CO 

8.     Agreement  In  Consideration  of  Marriage  66 

4.  Contract  or  Sale  of  Lands,  or  Any  Interest  lu  or  Concern- 

ing Them    G9 

5.  Agreement  Not  to  be  Performed  Within  One  Tear 72 

IIL     Form  Required    74 

1.  Contents    of   Writing    74 

2.  Separate  Papers   80 

3.  By   Whom   Signed    85 

IV.  Effect  of  Noncompliance   86 

V.     Contracts  Within  Section  17  92 

1.  What  are  Goods,  Wares,  and  Merchandises   92 

2.  Acceptance  and   Receipt    97 

THSOCKU.COHX.  (t) 


Vi  TABLE   OF   CONTENTS 

CONSIDERATION 

Page 

I.  Consideration  Defined  100 

II.  Necessity  for  Consideration   lO-^ 

III.  Adequacy  of  Consideration   103 

IV.  Sufficiency  or  Reality  of  Consideration    106 

1.  Mutual   Promises— Voluntary  Subscriptions   106 

2.  Forbearance  to  Exercise  a  Right   109 

3.  Doing  Wbat  One  is  Bound  to  Do  115 

(A)  Additional  Compensation   .' 115 

(B)  Part  Payment  in  Satisfaction  of  Debt   120 

4.  Impossibility  and   Vagueness    126 

e.     Consideration   in  Respect  of  Time — Past  Consideration....  12S 

(A)  General  Rule   128 

(B)  Exceptions     120 

(a)     Part  Consideration   Given  at  the  Request  of 

Promisor     129 

(h)     Revival  of  Unenforceable  Agreement 129 

,  CAPACITY  OF  PARTIES 

L     Infants     131 

1.  In  General   131 

2.  Liability  for  Necessaries 135 

3.  Ratification  and  Avoidance 137 

(A)  Who  may  Avoid  Contract    137 

(B)  What  Amounts  to  a  Ratification  139 

(C)  Return  of  Consideration    140 

4.  Torts  in  Connection  with  Contracts 143 

II.  Insane  Persons   l"*^ 

1.  In  General   •  •  •  149 

2.  Ratification  and  Avoidance    153 

III.  Drunken   Persons    155 

IV.  Married  Women   , 159 

V.     Corporation    161 


REALITY  OF  CONSENT 


Mistake 


166 


1.  Mistake  as  to  the  Nature  of  the  Transaction— Written  In- 

strument      166 

2.  Mistake  as  to  the  Person  with  Whom  the  Contract  is  Made  169 
8.     Mistake  as  to  Nature  of  Subject-Matter  of  Contract 173 

(A)  Mistake  as  to  Existence  of  Subject-Matter 173 

(B)  Mistake  as  to  Identity  of  Subject-Matter 176 

(C)  Mistake  as  to  Nature  and  Essential  Qualities  of  Sub- 

ject-Matter      180 

4.     Effect  of  Mistake — Remedies  184 

II.     Misrepresentation     184 


111.     Fraud 


187 


1.  Fraud  is  a  False  Representation    187 

2.  Character  of  Representation — Opinion   189 

3.  Right  to   Rely  on  Statements    192 

4.  Knowledge  of  Falsity— Recklessness   •  •  193 

6.  Intention    195 


TABLE  OF  CONTENTS  Vll 

Page 

6.  Representation  must  Deceive  195 

7.  Effect— Remedies    196 

IV.     Duress 200 

V.    Undue  Influence  212 

LEGALITY  OF  OBJECT 

L     Agreements  in  Violation  of  Positive  Law  219 

1.  Breach  of  Rules  of  Common  Lav?  219 

2.  Agreements  in  Breacli  of  Statute 222 

(A)  In   General — Prohibition  by    Statute 222 

(B)  Particular  Agreements  in  Breach  of  Statute 227 

(a)  Regulating  Trade,  Profession,  or  Business....  227 

(b)  Contracts  in  Breach  of  Sunday  Laws 227 

(c)  Usury    230 

(d)  Wagers  and  Gambling  Transactions 233 

IL     Agreements  Contrary  to  Public  Policy 23G 

L     Agreements  Tending  to  Injure  the  Public  Service 236 

(A)  Assignment  of  Salary  or  Pension  by  Otticer 236 

(B)  Lobbying    Contracts    241 

2.     Agreements  Promotive  of  Nonofflcial  Corruption 246 

iJ.     Agreements  Tending  to  Pervert  or  Obstruct  Public  Justice. .  249 

(A)  Compounding   Crime    249 

(B)  Reference  to  Arbitration   251 

4.  Encouragement  of  Litigation — Champerty  and  Maintenance  254 

5.  Agreements   of   Immoral  Tendency   257 

6.  Agreements  Tending  to  Fraud  and  Breach  of  Trust 259 

7.  Agreements  in  Derogation  of  the  Marriage  Relation 263 

8.  Agreements  in  Restraint  of  Trade   264 

(A)  In   General    264 

(B)  Sale  of  Secret  Process   270 

9.  Unlawful  Combinations,  Monopolies,  Trusts,  Etc 274 

10.     Exempting  from  Liability  for  Negligence   286 

IIL     Effect  of  Illegality  290 

1.  Agreements   Partly   Illegal    290 

2.  Object  Innocent,  But  Intention  Unlawful   294 

(A)  Sale    294 

(B)  Loan 297 

8.     Relief  of  Party  to  Unlawful  Agreements  298 

OPERATION  OF  CONTRACT 

L     Limits   of  Contractual  Relation    305 

1.  Imposing  Liability  on  Third  Persons  305 

(A)  J  u  General    305 

(B)  Liability  for  Inducing  Party  to  Break  Contract....  308 

2.  Conferring  Rights  on  Third  I'ersons  314 

(A)  Massachusetts    Doctrine    314 

(B)  New    York    Doctrine    315 

II.     Assignment  of  Contracts   31i0 

1.     By  Voluntary  Act  of  the  Parties 3L'() 

(A)  Asslguiuc'Ut  of   LiMbilitk's    SL'O 

(B)  Assignment  of  Rights   ."L'  I 

(u)     General    Rule    'S2l 

(b)     Exceptions     31!6 


Vlll  TABLE   OF    CONTENTS 

Page 
2.     By  Operation  of  Law  328 

(A)  Assignment  of  Obligations  on  Transfer  of  Interests 

in  Land  328 

(B)  Assignment  of  Contractual  Obligation  by  Marriage..  329 

(C)  Assignment  of  Contractual  Obligation  by  Death....  330 
IIL     Joint  and  Several  Contracts  333 

1.  Joint   Contracts    333 

2.  Contracts  Both  Joint  and  Several 335 


INTERPRETATION  OF  CONTRACT 

I.     Rules  Relating  to  Evidence 337 

1.  Proof  of  Document  337 

2.  Parol  Evidence   339 

(A)  In    General    339 

(B)  Evidence  of  Custom  and  Usage 345 

II.     Rules   of  Construction    347 

L     In    General    347 

2.  Rules  as  to  Time  350 

3.  Rules  as  to  Penalties  and  Liquidated  Damages 355 


DISCHARGE  OF  CONTRACT 

I.     Discharge  of  Contract  by  Agreement  3G3 

1.  Waiver,  Cancellation,  or  Rescission   363 

2.  Substituted    Contract    365 

3.  Occurrence  of  Condition  Subsequent  369 

II.     Discharge  of  Contract  by  Performance    370 

1.  In  General  370 

2.  Payment    374 

3.  Tender   376 

IIL     Discharge  of  Contract  by  Breach  378 

L.     Renunciation  of  Contract   378 

(A)  Before  Performance  is  Due   378 

(B)  In  the  Course  of  Performance 3S3 

2.    Failure  of   Performance    386 

(A)  Independent   Promises    386 

(a)  Absolute   Promises    386 

(b)  Promises  the  Performance  of  Which  is  Divis- 

ible      386 

(B)  Conditional    Promises    396 

(a)  Concurrent    Conditions    396 

(b)  Vital   Conditions    398 

(c)  Warranties     401 

IV.     Discharge  by  Impossibility  of  Performance  404 

V.     Discbarge  by  Operation  of  Law   . . . '. 406 

1.  Merger     406 

2.  Alteration  of  a  Written  Instrument  407 

VI.     Remedies  on  Breach  of  Contract  409 

1.  Damages     409 

2.  .Specific   Performance    415 

3.  Discharge  of  Right  of  Action   418 

(A)  By  Accord  and  Satisfaction   418 

(B)  By  Lapse  of  Time  422 


TABLE  OF  CASES 


Page 

Allen   V.   Brown    327 

Anderson  v.  May *404 

Arkansas    Val.    Smelting    Co.    v. 

Belden  Min.  Co 320 

Atkins  V.  Johnson 219 

Baldwin  v.  Williams 92 

Barrett  v.  Buxton    155 

Bangor  Bank  v.  Treat   335 

Beatty's  Estate  v.   Western   Col- 
lege of  Toledo,  Iowa 106 

Beck  &   Pauli  Lithographing  Co. 
V.  Colorado  Milling  &  Elevator 

Co 350 

Bellows   V.   Sowles   56 

Billings,   Appeal  of   330,  404 

Bishop  V.  Palmer   290 

Blake  v.  Yount 230 

Bliss  V.  Gardner  236 

Bliss  y.  Lawrence 236 

Borden  v.  Boardman  314 

Boston  Ice  Co.  v.  Potter 305 

Britain   v.  Rossiter    86 

Broadnax  v.  Ledbetter 27 

Bryant   v.  Isburgh   401 

Carter  &  Moore  v.  United  Ins.  Co. 

of  New  York  326 

Cheltenham   Stone   &   Gravel  Co. 

V.  Gates  Iron  Works   374 

Cherokee  Tanning  Extract  Co.  v. 

Western   Union   Tel.    Co 31 

Citv  of  Philadelphia  v.  Reeves  & 

Cabot     3.33 

Clifton  T.  Jackson  Iron  Co 406 

Cole  V.   Pennoyer    131 

Coolidge    V.    Ruggles 324 

Cooper  V.  Kane   345 

Couturier  v.  Hastie 173,  184 

Cundy  v.  Lindsay 109,  184 

Diamond   Matcli   Co.   v.    Rocl)er. .   264 
Downing  v.  Mt  Washington  Road 

Co 161 

Doyle  V.  Dixon   72 

Dusenbury  v.  Hoyt 12',) 


Pag« 

Edmonds  v.  Hughes 257 

Eliason   v.   Henshaw   18 

Foster  v.   Mackinnon   166,  184 

Galusha  v.   Sherman   200 

Globe  Mut.  Life  Ins.  Ass'n  v.  Wag- 
ner      184 

Gordon  y.  George  328 

Gordon  v.  Parmelee  ISO 

Gorham's    Adm'r     v.     Meacham's 

Adm'r    3 

Graves  v.  Johnson   294 

Green  v.  Armstrong  69 

Gregory   v.    Pierce    150 

Grigsby  v.  Stapleton 187 

Hacker,  Appeal  of 40 

Hamer  v.  Sidway  100 

Hamilton  v.  Liverpool  &  London 

&  Globe  Ins.  Co 251 

Handy  v.  St  Paul  Globe  Pub.  Co.  227 

Harrison  v.  Henderson  418 

Hart  V.  Georgia  R.  Co 126 

Heintz   v.    Burkhard    94 

Hertzog   v.   Hertzog   5 

Household  Fire  &  Carriage  Aca 

Ins.  Co.  V.  Grant    12 

llovey  V.  Hobson    149 

Howard,  Appeal  of   233 

llowarth  v.  Warmser   329 

Hunt  V.  Hunt 66 

I  de  V.  Leiser   20 

Irwin  V.   Wilson   176,  184 

Isaacs  V.  Wanamaker  402 

Jaffray  v.  Davis   120 

James  v.  Hodsden lO.^ 

James  Quirk  Milling  Co.  v.  Min- 
neapolis &  St.  L.  R.  Co 2S6 

Jaquith  V.  Hudson   35r» 

Jones  V.  Rice   249 

Kullc'tt  V.  Roble 3<;;^ 

Keiiionsky  v.  C'hnpln    97 

King  V.  Dulutb,  M.  &  N.  R.  Co...   115 


Thbockm.Cont. 


(ix) 


TABLE    OF    CASES 


Page 

Larson  v.  Jensen 00 

Lawrence  v.  Fox   315 

Lemmon   v.    Beeman    140 

Levy  V.   Spencer   259 

Livingston  v.   Page 24C 

Louisville  Asphalt  Varnish  Co.  v. 
Lorick   80 

McKanna  v.  Merry  135 

McKenzie    v.    Harrison    305 

McPharland   v.   Larkin    212 

Mansfield  v.  Gordon  137 

Minnesota  Linseed  Oil  Co.  v.  Col- 
lier White  Lead  Co 24 

Moore  v.  Elmer  128,  129 

Moore  v.  Norman   37f; 

Morrison  v.   Rogers    263 

Morton   v.    Lamb    386,  396 

Mutual  Life  Ins.  Co.  v.  Hunt 153 

Norrington  v.  Wright   380 

Xugent  V.  Wolfe  62 

O'Brien  v.  Young 36 

O'Neill  v.  Supreme  Council  A.  L. 
H 378 

Pennington  v.  Howland    370 

Perkins  v.  Pendleton  308 

Piano  Mfg.  Co.  v.   Ellis   347 

Pope  V.  Allis   398 

Prescott  V.   Jones   10 

President,   etc.,   of   Bangor   Bank 

V.  Treat   835 

Quirk  Milling  Co.  t.  Minneapolis 
&  St  L.  R.  Co 286 


Page 

'vnnn  v.  Hughes 34,  103 

Ray  V.  Thompson   369 

Rice  V.  Boyer   143 

Richmond  &  D.  R.  Co.  v.  Jones. . .  337 

Rogers  Mfg.  Co.  v.  Rogers   415 

Rowley   v.  Bigelow    196 

Schnell  v.  Nell  103 

Smith  V.  Farra    109 

Smith  V.  Williams    339 

Standard  Oil  Co.  of  New  Jersey 

V.    T'nitPd    Stntes    274 

Stevens  v.  Ludlum  192 

Stimson  v.  Helps    193 

Stone  V.  Dennison 54 

Taylor  &  Co.'s  Estate,  In  re 233 

Thompson  v.  Lay   139 

Thompson  v.   Reynolds   254 

Tode  V.   Gross    270 

Trist  V.  Child 241 

Tyler  v.  Carlisle   297 

Ullsperger  v.  Meyer  74 

United  States  v.  Behan  409 

Vanmeter  v.   Spurrier   222 

Warren  v.  Cleveland    422 

Watkins   v.    Robertson    43 

White  V.  Corlies   1 

White  V.  President,  etc.,  of  Frank- 
lin   Bank    298 

Wigent  V.  Marrs   383 

Wm.  Rogers  Mfg.  Co.  v.  Rogers..  415 

Wood  V.  Boynton   180 

Wood  V.   Steele  407 


HORNBOOK  CASES 


ON  THE 


LAW  OF  CONTRACTS 


DEFINITION,  NATURE,  AND  REQUISITES  OF  CONTRACT 

IN  GENERAL 

I.  Agreement  * 


WHITE  V.   CORLIES. 

(Court  of  Appeals  of  New  York,  1871.    46  N.  Y.  467.) 

The  action  was  for  an  alleged  breach  of  contract. 

The  plaintiff  was  a  builder  with  his  place  of  business  in  Fortieth 
street,  New  York  City. 

The  defendants  were  merchants  at  32  Dey  street. 

In  September,  1865,  the  defendants  furnished  the  plaintiff  with  spec- 
ifications, for  fitting  up  a  suit  of  offices  at  57  Broadway,  ajid  request- 
ed him  to  make  an  estimate  of  the  cost  of  doing  the  work. 

On  September  2Sth  the  plaintiff  left  his  estimate  with  the  defend- 
ants, and  they  were  to  consider  upon  it,  and  inform  the  plaintiff  of 
their  conclusions. 

On  the  sarr^e  day  the  defendants  made  a  change  in  their  specifica- 
tions and  sent  a  copy  of  the  same,  so  changed,  to  the  plaintiff,  for  his 
assent  under  his  estimate,  which  he  assented  to  by  signing  the  same  and 
returning  it  to  the  defendants. 

On  the  day  following,  the  defendants'  bookkeeper  wrote  the  plaintiff 
the  following  note : 

"New  York,  September  29th.  Upon  an  agreement  to  finish  the  fit- 
ting up  of  offices  57  Broadway  in  two  weeks  from  date,  you  can  begin 
at  once.  The  writer  will  call  again,  probably  between  5  and  6  this  p. 
m.    W.  H.  R.,  for  J.  W.  Corlies  &  Co.,  32  Dey  street." 

»  For  discus.slon  of  principles,  see  Clarl:  on  Contracts  (2(1  Ed.)  |  3. 

TnBOCKM.CONT. — 1 


2  DEFINITION,  NATURE,  AND   REQUISITES 

No  reply  to  this  note  was  ever  made  by  the  plaintiff;  and  on  the 
next  day  the  same  was  countermanded  by  a  second  note  from  the  de- 
fendants. 

Immediately  on  receipt  of  the  note  of  September  29th,  and  before 
the  countermand  was  forwarded,  the  plaintiff  commenced  a  perform- 
ance by  the  purchase  of  lumber  and  beginning  work  thereon. 

And  after  receiving  the  countermand,  the  plaintiff  brought  this  ac- 
tion for  damages  for  a  breach  of  contract. 

The  court  charged  the  jury  as  follows:  '"From  the  contents  of  this 
note  which  the  plaintiff  received,  was  it  his  duty  to  go  down  to  Dey 
street  (meaning  to  give  notice  of  assent)  before  commencing  the  work. 
In  my  opinion  it  was  not.  He  had  a  right  to  act  upon  this  note  and 
commence  the  job,  and  that  was  a  binding  contract  between  the  parties." 

To  this  defendants  excepted. 

-•FoLGER,  J.  We  do  not  think  that  the  jury  found,  or  that  the  tes- 
timony shows  that  there  was  any  agreement  between  the  parties  before 
the  written  communication  of  the  defendants  of  September  30  was 
received  by  the  plaintiff.  This^  note -did  not  make  an  agreement.  It 
was  a  proposition,  and  must  have  been  accepted  by  the  plaintiff  before 
either  party  was  bound  in  contract  to  the  other.  The  only  overt  action 
which  is  claimed  by  the  plaintiff  as  indicating  on  his  part  an  acceptance 
of  the  offer,  was  the  purchase  of  the  stuff  necessary  for  the  work,  and 
commencing  work  as  we  understand  the  testimony,  upon  that  stuff. 

We  understand  the  rule  to  be  that  where  an  offer  is  made  by  one 
party  to  another  when  they  are  not  together,  the  acceptance  of  it  by  that 
other  must  be  manifested  by  some  appropriate  act.  It  does  not  need 
that  the  acceptance  shall  come  to  the  knowledge  of  the  one  making 
the  offer  before  he  shall  be  bound.  But  though  the  manifestation  need 
not  be  brought  to  his  knowledge  before  he  becomes  bound,  he  is  not 
bound  if  that  manifestation  is  not  put  in  a  proper  way  to  be  in  the 
usual  course  of  events,  in  some  reasonable  time  communicated  to  him. 
Thus  a^letter  received  by  mail  containing  a  proposal  may  be  answered 
by  letter  by  mail  containing  the  acceptance.  And  in  general  as  soon 
as  the  answering  letter  is  mailed,  the  contract  is  concluded.  Though 
one  party  does  not  know  of  the  acceptance,  the  manifestation  thereof 
is  put  in  the  proper  way  of  reaching  him. 

In  the  case  in  hand  the  plaintiff  determined  to  accept.  But  a  mental 
determination  not  indicated  by  speech,  or  put  in  course  of  indication 
by  act  to  the  other  party,  is  not  an  acceptance  which  will  bind  the  other. 
Nor  does  an  act  which  in  itself  is  no  indication  of  an  acceptance,  be- 
come such  because  accompanied  by  an  unevinced  mental  determination. 
Where  the  act  uninterpreted  by  concurrent  evidence  of  the  mental 
purpose  accompanying  it  is  as  well  referable  to  one  state  of  facts  as 
another,  it  is  no  indication  to  the  other  party  of  an  acceptance,  and 
does  not  operate  to  hold  him  to  his  offer. 

Conceding  that  the  testimony  shows  that  the  plaintiff  did  resolve 


OBLIGATION  » 

to  accept  this  offer,  he  did  no  act  which  indicated  an  acceptance  of 
it  to  the  defendants.  He,  a  carpenter  and  builder,  purchased  stuff 
for  the  work.  But  it  was  stuff  as  fit  for  any  other  Hke  work.  He  be- 
gan work  upon  the  stuff,  but  as  he  would  have  done  for  any  other  like 
work.  There  was  nothing  in  his  thought  formed  but  not  uttered,  or  in 
his  acts  that  indicated  or  set  in  motion  an  indication  to  the  defend- 
ants of  his  acceptance  of  their  offer,  or  which  could  necessarily  result 
therein. 

But  the  charge  of  the  learned  judge  was  fairly  to  be  understood  by 
the  jury  as  laying  down  the  rule  to  them,  that  the  plaintiff  need  not 
indicate  to  the  defendants  his  acceptance  of  their  offer ;  and  that  the 
purchase  of  stuff  and  working  on  it  after  receiving  the  note,  made  a 
binding  contract  between  the  parties.  In  this  we  think  the  learned 
judge  fell  into  error. 

The  judgment  appealed  from  must  be  reversed  andl  a  new  trial  or- 
dered, with  costs  to  abide  the  event  of  the  action.  All  concur,  but 
Allen,  J.,  not  voting. 

Judgment  reversed,  and  new  trial  ordered. 


X 


II.  Obligation* 


GORHAM'S  ADM'R  v.  MEACHAM'S  ADM'R. 
(Supreme  Court  of  Vermont,  1891.    63  Vt.  231,  22  AU.  572,  13  L.  R,  A.  676.) 

Bill  by  A.  W.  Gorham,  administrator  of  the  estate  of  Angeline  W. 
Gorham,  against  R.  S.  Meacham's  administrator,  to  foreclose  a  mort- 
gage. 

Tyler,  J."  The  following  facts  are  reported :  R_ollins  S.  Meacham, 
in  his  lifetime,  was  administrator  with  the  will  annexed  of  the  estate 
of  Angeline  W.  Gorham,  and  became  largely  indebted  to  the  estate 
for  moneys  that  had  come  inTo  his  hands  as  such  administrator.  For 
the  purpose  of  securing  the  estate  for  this  indebtedness,  on  March  1, 
1889,  he  made  and  executed  a  promissory  note  for  $1,550,  payable  to 
himself  as  administrator  on  demand,  and  in  like  manner  a  mortgage 
of  his  home  place,  conditioned  for  the  payment  of  the  note.  He  never 
settled  the  estate,  nor  rendered  any  account  to  the  probate  court.  He 
converted  the  assets  into  money,  and  appropriated  it  to  his  own  use 
in  his  private  business.  At  the  time  the  note  and  mortgage  were  exe- 
cuted, and  at  his  decease,  he  was  indebted  to  the  estate  to  the  amount 
of  $7,000,  and  was  insolvent.  His  debts,  besides  what  he  owed  the 
estate,  amounted  to  about  $9,000,  and  his  assets  to  about  $4,000.    The 

«  For  dl-scuHslon  of  princlplcK,  see  rinrk  on  Contracts  ('2d  i;d.)  §  4. 
«  A  portion  of  the  opinion  l«  omllled. 


4  DEFINITION,  NATURE,  AND   REQUISITES 

note  and  mortgage  were  retained  by  hirn,  and  were  found  after  his  de- 
cease in  his  safe  among  other  papers  that  belonged  to  the  estate,  and 
among  certain  deeds  andl  mortgages  of  his  own.  He  died  November 
17,  1889.  His  wife  was  the  daughter  of  the  testatrix,  and  is  the  only 
person  interested  in  her  estate.  After  Meacham's  decease,  the  defend- 
ant, as  his  administrator,  handed  the  note  and  mortgage  to  Burditt, 
after  the  latter's  appointment  as  administrator  upon  the  estate  of  Mrs. 
Gorham,  and  Burditt  caused  the  mortgage  to  be  recorded  in  the  town- 
clerk's  office.    The  question  is  as  to  its  validity. 

_  The  mortgage  must  be  held  invalid  for  want  of  contracting  parties. 
A  contract  necessarily  implies  a  concurrence  of  intention  in  two  parties, 
one  of  whom  promises  something  to  the  other,  who  on  his  part  accepts 
such  promise.  One  person  cannot  by  his  promise  confer  a  right  against 
himself  until  the  person  to  whom  the  promise  is  made  has  accepted  the 
same.  Until  the  concurrence  of  the  two  minds,  there  is  no  contract ; 
there  is  merely  an  offer  which  the  promisor  may  at  any  time  retract. 
Chitty,  Cont.  9,  quoting  Poth.  ObK,  It  is  essential  to  the  validity  of  a  deed 
that  there  be  proper  parties, — a  person  able  to  contract,  and  a  person 
able  to  be  contracted  with.  3  Washb.  Real  Prop.  217.  To  uphold  this 
mortgage,  we  must  say  that  there  may  be  two  distinct  persons  in  one ; 
for  in  law  the  mortgagor  and  mortgagee  are  identical.  The  addition 
of  the  words  "executor  of  A.  W.  Gorham's  estate"  does  not  change  the 
legal  effect  of  the  grant,  which  is  to  Meacham  in  his  individual  capac- 
ity. In  3  Washb.  Real  Prop.  279,  it  is  said  that  a  grant  to  A.,  B., 
and  C.,  trustees  of  a  society  named,  their  heirs,  etc.,  is  a  grant  to 
them  individually ;  and  Austin  v.  Shaw,  10  Allen  (Mass.)  552 ;  Towar 
V.  Hale,  46  Barb.  (N.  Y.)  361 ;  Combs  v.  Brown,  29  N.  J.  Law,  Z6,-- 
are  cited. 

In  this  case  the  grant  and  the  habendum  are  not  to  the  estate  and 
its  legal  representatives,  but  to  Meacham,  executor,  his  heirs  and  as- 
signs. Meacham  had  misappropriated  the  funds  of  the  estate,  and 
no  one  but  himself  assented  to  his  giving  a  note  and  mortgage  for  the 
purpose  of  partially  covering  his  default.     ♦     *     * 


OFFER  AND  ACCBPTANCB 


OFFER  AND  ACCEPTANCE 
I.  Communication  by  Conduct — Implied  Contracts  * 


HERTZOG  V.  HERTZOG. 

(Supreme  Court  of  Pennsylvania,  1857.    29  Pa.  465.) 

This^suit  was  brought  by  John  Hertzog  to  recover  from  the  estate 
of  his  f,atli§r  compensation  for  services  rendered  the-  latter  in  his 
liTetime,  and  for  money  lent.  The.  plaintiff  was  twenty-one  years  of 
age  about  the  year  1825,  but  continued  to  reside  with  his  father,  who 
was  a  farmer,  and  to  labour  for  him  on  the  farm  except  one  year 
thaTTie  was  absent  in  Virginia,  until  1842,  when  the  plaintiff  married 
and  took  his  wife  to  his  father's,  where  they  continued  for  some  time 
as  he  had  done  before.  His  father  then  put  him  on  another  farm 
which  he  owned,  and  some  time  afterwards  the  father  and  his  wife 
moved  into  the  same  house  with  John,  and  continued  to  reside  there 
until  his  death  in  1849. 

The  testimony  of  Adam  Stamm  and  Daniel  Roderick  was  relied  on 
to  prove  a  contract  or  agreement  on  the  part  of  George  Hertzog  to 
pay  for  the  services  of  plaintiff. 

Adam  Stamm  affirmed :  "John  laboured  for  his  father.  All  worked 
together.  The  old  man  got  the  proceeds.  I  know  the  money  from  the 
grain  went  to  pay  for  the  farm.  The  old  man  said  so.  John's  services 
worth  $12  per  month;  the  wife's  worth  $1  per  week,  beside  attending 
to  her  own  family.  I  heard  the  old  man  say  he  would  pay  John  for 
the  labour  he  had  done." 

Daniel  Roderick  sworn :  "John  Hertzog  requested  him  to  see  his 
father  about  paying  him  for  his  work,  which  he  had  done  and  was 
doing,  and  stated  that  he  had  frequently  spoken  to  the  old  man,  his 
father,  about  it,  and  he  had  still  put  him  off.  He  agreed  to  see  him, 
and  thinks  it  was  in  June,  1849.  Coming  from  Duncan's  Furnace,  he 
spoke  to  the  old  man  about  paying  John  for  his  work.  He  said  he 
intended  to  make  John  safe.  John  spoke  to  me  in  the  spring  of  1848. 
The  old  man  died  in  August,  1849,  I  think." 

Verdict  and  judgment  for  plaintiff,  and  writ  of  error  awarded  the 
defendant. 

LowRiR,  J.*  "Express  contracts  are,  where  the  terms  of  the  agree- 
ment are  openly  uttered  and  avowed  at  the  time  of  the  making;    as, 

iFor  di-scussion  ot  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  14,  15. 

«  The  statement  of  facts  Is  abridged  and  a  portion  of  the  opinion  is  omiltod. 


6  OFFER    AND    ACCEPTANCE 

to  deliver  an  ox  or  ten  loads  of  timber,  or  to  pay  a  stated  price  for 
certain  goods.  Implied  are  such  as  reason  and  justice  dictate;  and 
which,  therefore,  the  law  presumes  that  every  man  undertakes  to 
perform.  As,  if  I  employ  a  person  to  do  any  business  for  me,  or  per- 
form any  work,  the  law  implies  that  I  undertook  and  contracted  to 
pay  him  as  much  as  his  labour  deserves.  If  I  take  up  wares  of  a 
tradesman  without  any  agreement  of  price,  the  law  concludes  that  I 
contracted  to  pay  their  real  value." 

This  is  the  language  of  Blackstone  (2,Comm.  443),  and  it  is  open 
to  some  criticism.  There'  is  some  looseness  of  thought  in  supposing 
that  reason  and  justice  ever  dictate  any  contracts  between  parties,  or 
impose  such  upon  them.  All  true  contracts  grow  out  of  the  intentions 
of  the  parties  to  transactions,  and  are  dictated  only  by  their  mutual 
and  accordant  wills.  When  this  intention  is  expressed,  we  call  the 
contract  an  express  one.  When  it  is  not  expressed,  it  may  be  inferred, 
implied,  or  presumed,  from  circumstances  as  really  existing,  and  then 
the  contract,  thus  ascertained,  is  called  an  implied  one.  The  instances 
given  by  Blackstone  are  an  illustration  of  this. 

But  it  appears  in  another  place  (3  Bl.  Comm.  159-166)  that  Black- 
stone introduces  this  thought  about  reason  and  justice  dictating  con- 
tracts, in  order  to  embrace,  under  his  definition  of  an  implied  contract, 
another  large  class  of  relations,  which  involve  no  intention  to  contract 
at  all,  though  they  may  be  treated  as  if  they  did.  Thus,  whenever,  not 
our  variant  notions  of  reason  and  justice,  but  the  common  sense  and 
common  justice  of  the  country,  and  therefore  the  common  law  or 
statute  law,  impose  upon  any  one  a  duty,  irrespective  of  contract,  and 
allow  it  to  be  enforced  by  a  contract  remedy,  he  calls  this  a  case  of 
implied  contract.  Thus  out  of  torts  grows  the  duty  of  compensation, 
and  in  many  cases  the  tort  may  be  waived,  and  the  action  brought  in  as- 
sumpsit. 

It  is  quite  apparent,  therefore,  that  radically  different  relations  are 
classified  under  the  same  term,  and  this  must  often  give  rise  to  indis- 
tinctness of  thought.  And  this  was  not  at  all  necessary;  for  we 
have  another  well-authorized  technical  term  exactly  adapted  to  the 
office  of  making  the  true  distinction.  The  latter  class  are  merely  con- 
structive contracts,  while  the  former  are  truly  implied  ones.  In  one 
case  the  contract  is  mere  fiction,  a  form  imposed  in  order  to  adapt  the 
case  to  a  given  remedy ;  in  the  other  it  is  a  fact  legitimately  inferred. 
In  one,  the  intention  is  disregarded ;  in  the  other,  it  is  ascertained  and 
enforced.  In  one,  the  duty  defines  the  contract ;  in  the  other,  the 
contract  defines  the  duty. 

We  have,  therefore,  in  law  three  classes  of  relations  called  con- 
tracts : 

1.  Constructive  contracts,  which  are  fictions  of  law  adapted  to  en- 
force legal  duties  by  actions  of  contract,  where  no  proper  contract  ex- 
ists, express  or  implied. 


COMMUNICATION    BY   CONDUCT — IMPLIED   CONTRACTS  7 

2.  Implied  contracts,  which  arise  under  circumstances  which,  ac- 
cording to  the  ordinary  course  of  dealing  and  the  common  under- 
standing of  men,  show  a  mutual  intention  to  contract. 

3.  Express  contracts,  already  sufficiently  distinguished. 

In  the  present  case  there  is  no  pretence  of  a  constructive  contract, 
but  only  of  a  proper  one,  either  express  or  implied.  And  it  is  scarcely 
insisted  that  the  law  would  imply  one  in  such  a  case  as  this ;  yet  we 
may  present  the  principle  of  the  case  the  more  clearly,  by  showing 
why  it  is  not  one  of  implied  contract. 

The  law  ordinarily  presumes  or  implies  a  contract  whenever  this  is 
necessar}'^  to  account  for  other  relations  found  to  have  existed  between 
the  parties. 

Thus  if  a  man  is  found  to  have  done  work  for  another,  and  there 
appears  no  known  relation  between  them  that  accounts  for  such  serv- 
ice, the  law  presumes  a  contract  of  hiring.  But  if  a  man's  house  takes 
fire,  the  law  does  not  presume  or  imply  a  contract  to  pay  his  neigh- 
bours for  their  services  in  saving  his  property.  The  common  princi- 
ples of  human  conduct  mark  self-interest  as  the  motive  of  action  in 
the  one  case,  and  kindness  in  the  other;  and  therefore,  by  common 
custom,  compensation  is  mutually  counted  on  in  one  case,  and  in  the 
other  not. 

On  the  same  principle  the  law  presumes  that  the  exclusive  posses- 
sion of  land  by  a  stranger  to  the  title  is  adverse,  unless  there  be  some 
family  or  other  relation  that  may  account  for  it.  And  such  a  posses- 
sion by  one  tenant  in  common  is  not  presumed  adverse  to  his  co-ten- 
ants, because  it  is,  prima  facie,  accounted  for  by  the  relation.  And  so 
of  possession  of  land  by  a  son  of  the  owner.  And  in  Magaw's  Case, 
Latch,  168,  where  an  heir  was  in  a  foreign  land  at  the  time  of  a  de- 
scent cast  upon  him,  and  his  younger  brother  entered,  he  was  pre 
sumed  to  have  entered  for  the  benefit  of  the  heir.  And  one  who  en- 
ters as  a  tenant  of  the  owner  is  not  presumed  to  hold  adversely  even 
after  his  term  has  expired.  In  all  such  cases,  if  there  is  a  relation 
adequate  to  account  for  the  possession,  the  law  accounts  for  it  by  that 
relation,  unless  the  contrary  be  proved.  A  party  who  relies  upon  a 
contract  must  prove  its  existence ;  and  this  he  does  not  do  by  merelv 
proving  a  set  of  circumstances  that  can  be  accounted  for  by  another 
relation  appearing  to  exist  between  the  parties. 

Mr.  Justice  Rogers  is  entitled  to  the  gratitude  of  the  public  for  hav- 
ing, in  several  cases,  demonstrated  the  force  of  this  principle  in 
interpreting  transactions  between  parents  and  children  (Zeigler  v. 
Fisher's  Heirs,  3  Pa.  365;  In  re  Walker's  Estate,  3  Rawle,  249; 
Swires  v.  Parsons,  5  Watts  &  S.  357;  Candor  v.  Candor,  5  Watts  & 
S.  513)  ;  and  he  has  been  faithfully  followed  in  many  other  cases. 
Cummings  v.  Cummings,  8  Watts,  366;  Hack  v.  Stewart,  8  Pa.  213; 
Bash  v.  Bash,  9  Pa.  262;  Hugus  v.  Walker,  12  Pa.  175;  Lantz  v. 
Frey,  14  Pa.  201;   Sanders  v.  Wagonscller,  19  Pa.  251,  366;  '  McCut 


6  OFFER   AND    ACCEPTANCE 

V.  Johiiston,  25  Pa.  308;    Poorman  v.  Kilgore,  26  Pa.  372,  67  Am. 
Dec.  524;  Cox  v.  Cox,  26  Pa.  383,  67  Am.  Dec.  432. 

Eveiy  induction,  inference,  implication,  or  presumption  in  reason- 
ing of  any  kind  is  a  logical  conclusion  derived  from,  and  demanded  by, 
certain  data  or  ascertained  circumstances.  If  such  circumstances  de- 
mand the  conclusion  of  a  contract  to  account  for  them,  a  contract 
is  proved;  if  not,  not.  If  we  find,  as  ascertained  circumstances,  that 
a  stranger  has  been  in  the  employment  of  another,  we  immediately 
infer  a  contract  of  hiring,  because  the  principles  of  individuality  and 
self-interest,  common  to  human  nature,  and  therefore  the  customs  of 
society,  require  this  inference. 

But  if  we_find  a  son  in  the  employment  of  his  father,  we  do  not  in- 
fer a  contract  of  hiring,  because  the  principle  of  family  affection  is 
sufficient  to  account  for  the  family  association,  and  does  not  demand 
the  infereiice  of  a  contract.  And  besides  this,  the  position  of  a  son  in 
a  family  is  always  esteemed  better  than  that  of  a  hired  servant,  and  it 
is  very  raie  for  sons  remaining  in  their  father's  family,  even  after 
they  arrive  at  age,  to  become  mere  hired  servants.  If  they  do  not 
go  to  work  or  business  on  their  own  account,  it  is  generally  because 
they  perceive  no  sufficient  inducement  to  sever  the  family  bond,  and 
very  often  because  they  lack  the  energy  and  independence  necessary 
for  such  a  <  ourse ;  and  very  seldom  because  their  father  desires  to 
use  them  as  hired  servants.  Customarily  no  charges  are  made  for 
boarding  and  clothing  and  pocket  money  on  one  side,  or  for  work 
on  the  other;  but  all  is  placed  to  the  account  of  filial  and  parental 
duty  and  relationship. 

Judging  from  the  somewhat  discordant  testimony  in  the  present 
case,  this  son  remained  in  the  employment  of  his  father  until  he  was 
about  forty  years  old;  for  we  take  no  account  of  his  temporary  ab-^ 
sence.  While  living  with  his  father,  in  1842,  he  got  married,  and 
brought  his  wife  to  live  with  him  in  the  house  of  his  parents.  After- 
wards his  father  placed  him  on  another  farm  of  the  father,  and  very 
soon  followed  him  there,  and  they  all  lived  together  until  the  father's 
death  in  1849.  The  farm  was  the  father's  and  it  was  managed  by 
him  and  in  his  name,  and  the  son  worked  on  it  under  him.  No  ac- 
counts were  kept  between  them,  and  the  presumption  is  that  the  son 
and  his  family  obtained  their  entire  living  from  the  father  while  they 
were  residing  with  him. 

Does  the  law,  under  the  circumstances,  presume  that  the  parties  mu- 
tually intended  to  be  bound,  as  by  contract,  for  the  service  and  com- 
pensation of  the  son  and  his  wife?  It  is  not  pretended  that  it  does. 
But  it  is  insisted  that  there  are  other  circumstances  besides  these, 
which,  taken  together,  are  evidence  of  an  express  contract  for  com- 
pensation in  some  form,  and  we  are  to  examine  this. 

In  this  court  it  is  insisted  that  the  contract  was  that  the  farm  should 
be  worked  for  the  joint  benefit  of  the  father  and  son,  and  that  the 


COMMUNICATION   BY  CONDUCT — IMPLIED  CONTRACTS  9 

profits  were  to  be  divided;  but  there  is  not  a  shadow  of  evidence  of 
this.  And  moreover  it  is  quite  apparent  that  it  was  wages  only  that 
was  claimed  before  the  jury  for  the  services  of  the  son  and  his  wife, 
and  all  the  evidence  and  the  charge  point  only  in  that  direction. 
There  was  no  kind  of  evidence  of  the  annual  products. 

Have  we,  then,  any  evidence  of  an  express  contract  of  the  father 
to  pay  his  son  for  his  work  or  that  of  his  wife?  We  concede  that, 
in  a  case  of  this  kind,  an  express  contract  may  be  proved  by  indirect 
or  circumstantial  evidence.  If  the  parties  kept  accounts  between  them, 
these  might  show  it.  Or  it  might  be  sufficient  to  show  that  money 
was  periodically  paid  to  the  son  as  wages ;  or,  if  there  be  no  creditors 
to  object,  that  a  settlement  for  wages  was  had,  and  a  balance  agreed 
upon.    But  there  is  nothing  of  the  sort  here. 

The  court  told  the  jury  that  a  contract  of  hiring  might  be  inferred 
from  the  evidence  of  Stamm  and  Roderick.  Yet  these  witnesses  add 
nothing  to  the  facts  already  recited,  except  that  the  father  told  them, 
shortly  before  his  death,  that  he  intended  to  pay  his  son  for  his  work. 
This  is  no  making  of  a  contract  or  admission  of  one;  but  rather  the 
contrary.  It  admits  that  the  son  deserved  some  reward  from  his  fa- 
ther, but  not  that  he  had  a  contract  for  any. 

And  when  the  son  asked  Roderick  to  see  the  father  about  paying 
him  for  his  work,  he  did  not  pretend  that  there  was  any  contract,  but 
only  that  he  had  often  spoken  to  his  father  about  getting  pay,  and 
had  always  been  put  off.  All  this  makes  it  very  apparent  that  it  was 
a  contract  that  was  wanted,  and  not  at  all  that  one  already  existed ; 
and  the  court  was  in  error  in  saying  it  might  be  inferred,  from  such 
talk,  that  there  was  a  contract  of  any  kind  between  the  parties. 

The  difficulty  in  trying  causes  of  this  kind  often  arises  from  juries 
supposing  that,  because  they  have  the  decision  of  the  cause,  therefore 
they  may  decide  according  to  general  principles  of  honesty  and  fair- 
ness, without  reference  to  the  law  of  the  case.  But  this  is  a  despotic 
power,  and  is  lodged  with  no  portion  of  this  government. 

Their  verdict  may,  in  fact,  declare  what  is  honest  between  the  par- 
ties, and  yet  it  may  be  a  mere  usurpation  of  power,  and  thus  be  an 
effort  to  correct  one  evil  by  a  greater  one.  Citizens  have  a  right  to 
form  connexions  on  their  own  terms  and  to  be  judged  accordingly. 
When  parties  claim  by  contract,  the  contract  proved  must  be  the  rule 
by  which  their  rights  are  to  be  decided.  To  judge  them  by  any  other 
rule  is  to  interfere  with  the  liberty  of  the  citizen.     *     ♦     ♦ 

Judgment  reversed,  and  a  new  trial  awarded. 


10  OFFER   AND    ACCEPTANCB 


n.  Necessity  and  Effect  of  Acceptance  * 


PRESCOTT  V.  JONES  et  al. 

(Supreme  Court  of  New  Hampshire,  1898.    69  N.  H.  305,  41  Atl.  352.) 

Assumpsit  by  Charles  W.  Prescott  against  Jones  &  Perry.  De- 
fendants demur  to  the  declaration. 

The  declaration  alleged,  in  substance,  that  the  defendants,  as  insur- 
ance agents,  had  insured  the  plaintiff's  buildings  in  the  Manchester 
Fire  Insurance  Company  until  February  1,  1897 ;  that  they  notified 
him,  January  23,  1897,  that  they  would  renew  the  policy,  and  insure 
his  buildings  for  a  further  term  of  one  year  from  February  1,  1897, 
in  the  sum  of  $500,  unless  notified  to  the  contrary  by  him ;  that  he,  re- 
lying on  the  agreement  to  insure  his  buildings  unless  notified  to  the 
contrary,  and  believing,  as  he  had  the  right  to  believe,  that  his  build- 
ings would  be  and  were  insured  by  them  from  said  February  1st  for 
one  year,  gave  no  notice  to  them  to  insure  or  not  to  insure  said  build- 
ings; yet  they  did  not  insure  the  buildings  as  they  had  agreed,  and 
did  not  notify  or  inform  him  of  their  intention  not  to  do  so,  and  the 
buildings  were  destroyed  by  fire  March  1,  1897,  without  fault  on  his 
part. 

Blodgett,  J.  While  an  offer  will  not  mature  into  a  complete  and 
effectual  contract  until  it  is  acceded  to  by  the  party  to  whom  it  is  made, 
and  notice  thereof,  either  actual  or  constructive,  given  to  the  maker 
(Abbott  v.  Shepard,  48  N.  H.  14,  17;  Perry  v.  Insurance  Co.,  67  N. 
H.  291,  294,  295,  33  Atl.  731,  68  Am.  St.  Rep.  668),  it  must  be  con- 
ceded to  be  within  the  power  of  the  maker  to  prescribe  a  particular  form 
or  mode  of  acceptance ;  and,  the  defendants  having  designated  in  their 
offer  what  they  would  recognize  as  notice  of  its  acceptance,  namely, 
failure  of  the  plaintiff  to  notify  them  to  the  contrary,  they  may  properly 
be  held  to  have  waived  the  necessity  of  formally  communicating  to  them 
the  fact  of  its  acceptance  by  him.  But  this  did  not  render  acceptance 
on  his  part  any  less  necessary  than  it  would  have  been  if  no  particular 
form  of  acceptance  had  been  prescribed,  for  it  is  well  settled  that  "a 
party  cannot,  by  the  wording  of  his  offer,  turn  the  absence  of  com- 
munication of  acceptance  into  an  acceptance,  and  compel  the  recipient 
of  his  offer  to  refuse  it  at  the  peril  of  being  held  to  have  accepted  it." 
Clark,  Cont.  31,  32.  "A  person  is  under  no  obligation  to  do  or  say 
anything  concerning  a  proposition  which  he  does  not  choose  to  accept. 
There  must  be  actual  acceptance  or  there  is  no  contract."  More  v. 
Insurance  Co.,  130  N.  Y.  537,  547,  29  N.  E.  757,  759.    And  to  con- 

«  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §  17. 


NECESSITY   AND    EFFECT   OF   ACCEPTANCE  11 

stitute  acceptance  "there  must  be  words,  written  or  spoken,  or  some 
other  overt  act."    Bish.  Cont.  •§  183,  and  authorities  cited. 

If,  therefore,  the  defendants  might  and  did  make  their  offer  in  such 
a  way  as  to  dispense  with  the  communication  of  its  acceptance  to  them 
in  a  formal  and  direct  manner,  they  did  not  and  could  not  so  frame  it 
as  to  render  the  plaintiff  liable  as  having  accepted  it,  merely  because 
he  did  not  communicate  his  intention  not  to  accept  it.  And  if  the 
plaintiff  was  not  bound  by  the  oft'er  until  he  accepted  it,  the  defendants 
could  not  be,  because  "it  takes  two  to  make  a  bargain,"  and,  as  con- 
tracts rest  on  mutual  promises,  both  parties  are  bound  or  neither  is 
bound.  The  inquiry  as  to  the  defendants'  liability  for  the  nonperform- 
ance of  their  offer  thus  becomes  restricted  to  the  question,  did  the 
plaintiff  accept  the  offer  so  that  it  became  by  his  action  clothed  with 
legal  consideration,  and  perfected  with  the  requisite  condition  of  mu- 
tuality? As,  in  morals,  one  who  creates  an  expectation  in  another  by 
a  gratuitous  promise  is  doubtless  bound  to  make  the  expectation  good, 
it  is  perhaps  to  be  regretted  that  upon  the  facts  before  us  we  are  con- 
strained to  answer  the  question  in  the  negative.  While  a  gratuitous 
undertaking  is  binding  in  honor,  it  does  not  create  a  legal  responsibility. 

Whether  wisely  and  equitably  or  not,  the  law  requires  a  considera- 
tion for  those  promises  which  it  will  enforce,  and,  as  the  plaintiff  paid 
no  premium  for  the  policy  which  the  defendants  proposed  to  issue, 
nor  bound  himself  to  pay  any,  there  was  no  legal  consideration  for 
their  promise,  and  the  law  will  not  enforce  it.  Then,  again,  there  was 
no  mutuality  between  the  parties.  All  the  plaintiff  did  was  merely  to 
determine  in  his  own  mind  that  he  would  accept  the  offer,  for  there 
was  nothing  whatever  to  indicate  it  by  way  of  speech  or  other  ap- 
propriate act.  Plainly,  this  did  not  create  any  rights  in  his  favor  as 
against  the  defendants.  From  the  very  nature  of  a  contract  this  must 
be  so,  and  it  therefore  seems  superfluous  to  add  that  the  universal  doc- 
trine is  that  an  uncommunicated  mental  determination  cannot  create  a 
binding  contract. 

Nor  is  there  any  estoppel  against  the  defendants  on  the  ground  that 
the  plaintiff  relied  upon  their  letter,  and  believed  they  would  insure  his 
buildings  as  therein  stated.  The  letter  was  a  representation  only  of 
a  present  intention  or  purpose  on  their  part.  "It  was  not  a  statement 
of  a  fact  or  state  of  things  actually  existing,  or  past  and  executed,  on 
which  a  party  might  reasonably  rely  as  fixed  and  certain,  and  by  which 
he  might  properly  be  guided  in  his  conduct.  *  *  *  The  intent  of 
a  party,  however  positive  or  fixed  concerning  his  future  action,  is  nec- 
essarily uncertain  as  to  its  fulfillment,  and  must  depend  on  contingen- 
cies, and  be  subject  to  be  changed  and  moflified  by  subsequent  events 
and'  circumstances.  *  *  *  On  a  representation  concerning  such 
a  matter  no  person  would  have  a  right  to  rely,  or  to  regulate  his  ac- 
tion in  relation  to  any  subject  in  which  his  interest  was  involved  as 
upon  a  fixed,  certain,  and  definite  fact  or  state  of  things,  permanent  in 
its  nature    and  not  liable  to  change.     ♦     *     ♦     The  doctrine  of  estop- 


12  OFFER   AND    ACCBPTAN'CE 

pel  *  *  *  on  the  ground  that  it  is  contrary  to  a  previous  state- 
ment of  a  party,  does  not  apply  to  such  a  representation.  The  reason 
on  which  the  doctrine  rests  is  that  it  would  operate  as  a  fraud  if  a 
party  was  allowed  to  aver  and  prove  a  fact  to  be  contrary  to  that  which 
he  had  previously  stated  to  another  for  the  purpose  of  inducing  him 
to  act  and  alter  his  condition,  to  his  prejudice,  on  the  faith  of  such 
previous  statement.  But  the  reason  wholly  fails  when  the  representa- 
tion relates  only  to  a  present  intention  or  purpose  of  a  party,  because, 
being  in  its  nature  uncertain,  and  liable  to  change,  it  could  not  properly 
form  a  basis  or  inducement  upon  which  a  party  could  reasonably  adopt 
any  fixed  and  permanent  course  of  action."  Langdon  v.  Doud,  10  Al- 
len (Mass.)  433,  436,  437 ;  Jackson  v.  Allen,  120  Mass.  64,  79 ;  Jorden 
V.  Money,  5  H.  L.  Cas.  185.  "An  estoppel  cannot  arise  from  a  prom- 
ise as  to  future  action  with  respect  to  a  right  to  be  acquired  upon  an 
agreement  not  yet  made."  Insurance  Co.  v.  Mowry,  96  U.  S.  544,  547, 
548,  24  L.  Ed).  674.  "The  doctrine  has  no  place  for  application  when 
the  statement  relates  to  rights  depending  upon  contracts  yet  to  be  made, 
to  which  the  person  complaining  is  to  be  a  party.  He  has  it  in  his  pow- 
er in  such  cases  to  guard  in  advance  against  any  consequences  of  a 
subsequent  change  of  intention  by  the  person  with  whom  he  is  deal- 
ing." See,  in  addition.  White  v.  Ashton,  51  N.  Y.  280;  Mason  v. 
Bridge  Co.,  28  W.  Va.  639,  649;  Jones  v.  Parker,  67  Tex.  16,  81,  82, 
3  S.  W.  222 ;   Bigelow,  Estop.  (5th  Ed.)  574. 

To  sum  it  up  in  a  few  words,  the  case  presented  is,  in  its  legal  as- 
pects, one  of  a  party  seeking  to  reap  where  he  had  not  sown,  and!  to 
gather  where  he  had  not  scattered.    Demurrer  sustained. 


III.  Communication  of  Acceptance  * 


HOUSEHOLD   FIRE  &  CARRIAGE  ACC.  INS.   CO.,   Limited, 

V.  GRANT. 

(Court  of  Appeal,  1S79.     4  Exch.  Div.  216.) 

Action  to  recover  i94.  15s.,  being  the  balance  due  upon  100  shares 
allotted  to  the  defendant  on  the  25th  of  October,  1874,  in  pursuance 
of  an  application  from  the  defendant  for  such  shares,  dated  the  30th 
of  September,  1874.  At  the  trial  before  Lopes,  J,,  during  the  Middle- 
sex sittings,  1878,  the  following  facts  were  proved : 

In  1874  one  Kendrick  was  acting  in  Glamorganshire  as  the  agent  of 
the  company  for  the  placing  of  their  shares,  and  on  the  30th  of  Sep- 
tember the  defendant  handed  to  Kendrick  an  application  in  writing 
for  shares  in  the  plaintiff's  company,  which  stated  that  the  defendant 

<  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  18-20. 


COMMUNICATION   OF   ACCEPTANCE  13 

had  paid  to  the  bankers  of  the  company  £5,  being  a  dieposit  of  Is.  per 
share,  and  requesting  an  allotment  of  100  shares,  and  agreeing  to  pay 
the  further  sum  of  79s.  per  share  within  twelve  months  of  the  date 
of  the  allotment.  Kendrick  duly  forwarded  this  application  to  the 
plaintiffs  in  London,  and  the  secretary  of  the  company,  on  the  20th 
of  October,  1874,  made  out  the  letter  of  allotment  in  favour  of  the 
defendant,  which  was  posted  addressed  to  the  defendant  at  his  resi- 
dence, 16  Herbert  street,  Swansea,  Glamorganshire.  His  name  was 
then  entered  on  the  register  of  shareholders. 

This  letter  of  allotment  never  reached  the  defendant.  The  defend- 
ant never  paid  the  £5  mentioned  in  his  application  but,  the  plaintiffs' 
company  being  indebted  to  the  defendant  in  the  sum  of  £S  for  commis- 
sion, that  sum  was  duly  credited  to  his  account  in  their  books.  In 
July,  1875,  a  dividend  at  the  rate  of  2i/^  per  cent,  was  declared  on  the 
shares,  and  in  February,  1876,  a  further  dividend  at  the  same  rate.  These 
dividends,  amounting  altogether  to  the  sum  of  5s.,  were  also  credited 
to  the  defendant's  account  in  the  books  of  the  plaintiffs'  company. 
Afterwards  the  company  went  into  liquidation,  and  on  the  7th  of 
December,  1877,  the  official  liquidator  applied  for  the  sum  sued  foi* 
from  the  defendant ;  the  defendant  declined  to  pay,  on  the  ground 
that  he  was  not  a  shareholder. 

On  these  facts  the  learned  judge  left  two  questions  to  the  jury:  (1) 
Was  the  letter  of  allotment  of  the  20th  of  October  in  fact  posted?  (2) 
Was  the  letter  of  allotment  received  by  the  defendant?  The  jury 
found  the  first  question  in  the  affirmative  and  the  last  in  the  negative. 
The  learned  judge  reserved  the  case  for  further  consideration,  and 
after  argument  directed  judgment  to  be  entered  for  the  plaintiffs  on 
the  authority  of  Dunlop  v.  Higgins,  1  H.  L.  Cas.  381. 

The  defendant  appealed. 

Thesiger,  L.  J.^  In  this  case  the  defendant  madte  an  application  for 
shares  in  the  plaintiffs'  company,  under  circumstances  from  which  we 
must  imply  that  he  authorized  the  company,  in  the  event  of  their  al- 
lotting to  him  the  shares  applied  for,  to  send  the  notice  of  allotment  by 
post.  The  company  did  allot  him  the  shares,  and  duly  addressed  to 
him  and  posted  a  letter  containing  the  notice  of  allotment,  but  upon 
the  finding  of  the  jury  it  must  be  taken  that  the  letter  never  reached 
its  destination.  In  this  state  of  circumstances.  Lopes,  J.,  has  decided 
that  the  defendant  is  liable  as  a  shareholder.  He  based  his  decision 
mainlv  upon  the  ground  that  the  point  for  consideration  was  covered 
by  authority  binding  upon  liim,  and  I  am  of  opinion  that  he  did  so 
rightly,  and  that  it  is  covered  by  authority  equally  binding  upon  this 
court. 

The  leading  case  upon  the  subject  is  Dunlop  v.  Higgins,  1  H.  L. 
Cas.  381.     It  is  true  that  Lord  Coltenham  might  have  decided  that 

8  The  concurring  opinion  of  Baggalluy,  L.  J.,  und  the  dissenting  opinion  of 
Bramwell,  L.  J.,  are  omitted. 


14  OFFER    AND    ACCEPTANCE 

case  without  deciding  the  point  raised  in  this.  But  it  appears  to  me 
equally  true  that  he  did  not  do  so,  and  that  he  preferred  to  rest  and 
didi  rest  his  judgment  as  to  one  of  the  matters  of  exception  before  him 
upon  a  principle  which  embraces  and  governs  the  present  case.  If 
so,  the  court  is  as  much  bound  to  apply  that  principle,  constituting  as 
it  did  a  ratio  decidendi,  as  it  is  to  follow  the  exact  decision  itself. 
The  exception  was  that  the  lord  justice  general  directed  the  jury  in 
point  of  law  that,  if  the  pursuers  posted  their  acceptance  of  the  offer 
in  due  time,  according  to  the  usage  of  trade  they  were  not  responsible 
for  any  casualties  in  the  post  office  establishment.  This  direction  was 
wide  enough  in  its  terms  to  include  the  case  of  the  acceptance  never 
being  delivered  at  all ;  and  Lord  Cottenham,  in  expressing  his  opin- 
ion that  it  was  not  open  to  objection,  did  so  after  putting  the  case  of 
a  letter  containing  a  notice  of  dishonour  posted  by  the  holder  of  a  bill 
of  exchange  in  proper  time,  in  which  case  he  said  (1  H.  L.  Cas.,  at 
page  399) :  "Whether  that  letter  be  delivered  or  not  is  a  matter  quite 
immaterial,  because  for  accidents  happening  at  the  post  office  he  is  not 
responsible."  In  short.  Lord  Cottenham  appears  to  me  to  have  held 
that,  as  a  rule,  a  contract  formed  by  correspondence  through  the  post 
is  complete  as  soon  as  the  letter  accepting  an  ofifer  is  put  into  the  post, 
and  is  not  put  an  end  to  in  the  event  of  the  letter  never  being  delivered. 
My  view  of  the  efifect  of  Dunlop  v.  Higgins,  1  H.  L.  Cas.  381,  is 
that  taken  by  James,  L.  J.,  in  Harris'  Case,  L.  R.  7  Ch.  587.  There, 
at  page  592,  he  speaks  of  the  former  case  as  "a  case  which  is  bind- 
ing upon  us,  and  in  which  every  principle  argued  before  us  was  dis- 
cussed at  length. by  the  lord  chancellor  in  giving  judgment."  He  adds, 
the  lord  chancellor  "arrived  at  the  conclusion  that  the  posting  of  the 
letter  of  acceptance  is  the  completion  of  the  contract ;  that  is  to  say, 
the  moment  one  man  has  made  an  offer,  and  the  other  has  done  some- 
thing binding  himself  to  that  offer,  then  the  contract  is  complete,  and 
neither  party  can  afterwards  escape  from  it."  Mellish,  J-,  also  took 
the  same  view.  He  says,  at  page  595 :  "In  Dunlop  v.  Higgins,  1  H. 
L.  Cas.  381,  the  question  was  directly  raised  whether  the  law  was 
truly  expounded  in  the  case  of  Adams  v.  Lindsell,  1  Barn.  &  Aid.  681. 
The  house  of  lords  approved  of  the  ruling  of  that  case.  The  Lord 
Chancellor  Cottenham  said,  in  the  course  of  his  judgment,  that  in  the 
case  of  a  bill  of  exchange  notice  of  dishonour,  given  by  putting  a  letter 
into  the  post  at  the  right  time,  had  been  held  quite  sufficient  whether 
that  letter  was  delivered  or  not ;  and  he  referred  to  Stocken  v.  Collin, 
7  Mees.  &  W.  515,  on  that  point,  he  being  clearly  of  opinion  that  the 
rule  as  to  accepting  a  contract  was  exactly  the  same  as  the  rule  as  to 
sending  notice  of  dishonour  of  a  bill  of  exchange.  He  then  referred 
to  the  case  of  Adams  v.  Lindsell,  1  Barn.  &  Aid.  681,  and  quoted  the 
observation  of  Lord  Ellenborough,  C.  J.  That  case  therefore  appears 
to  me  to  be  a  direct  decision  that  the  contract  is  made  from  the  time 
when  it  is  accepted  by  post." 


COMMUNICATION   OF   ACCEPTANCE  15 

Leaving  Harris'  Case,  L.  R.  7  Ch.  587,  for  the  moment,  I  turn  to 
Duncan  v.  Topham,  8  C.  B.  225,  in  which  Cresswell,  J.,  told  the  jury 
that  if  the  letter  accepting  the  contract  was  put  into  the  post  office 
and  lost  by  the  negligence  of  the  post  office  authorities,  the  contract 
would  nevertheless  be  complete;  and  both  he  and  Wilde,  C.  J.,  and 
Maule,  J.,  seem  to  have  understood  this  ruling  to  have  been  in  ac- 
cordance with  Lord  Cottenham's  opinion  in  Dunlop  v.  Higgins,  1  H.  L. 
Cas.  38L  That  opinion  therefore  appears  to  me  to  constitute  an  au- 
thority directly  binding  upon  us.  But  if  Dunlop  v.  Higgins,  1  H.  L. 
Cas.  381,  were  out  of  the  way,  Harris'  Case,  L.  R-  7  Ch.  587,  would 
still  go  far  to  govern  the  present.  There  it  was  held  that  the  accept- 
ance of  the  offer  at  all  events  binds  both  parties  from  the  time  of  the 
acceptance  being  posted,  and  so  as  to  prevent  any  retraction  of  the 
offer  being  of  effect  after  the  acceptance  has  been  posted. 

Now,  whatever  in  abstract  discussion  may  be  said  as  to  the  legal 
notion  of  its  being  necessary,  in  order  to  the  effecting  of  a  valid  and 
binding  contract,  that  the  minds  of  the  parties  should  be  brought  to- 
gether at  one  and  the  same  moment,  that  notion  is  practically  the  found- 
ation of  English  law  upon  the  subject  of  the  formation  of  contracts. 
Unless  therefore  a  contract  constituted  by  correspondence  is  absolutely 
concluded  at  the  moment  that  the  continuing  offer  is  accepted  by  the 
person  to  whom  the  offer  is  addressed,  it  is  difficult  to  see  how  the 
two  minds  are  ever  to  be  brought  together  at  one  and  the  same  moment. 
This  was  pointed  out  by  Lord  Ellenborough  in  the  case  of  Adams 
V.  Lindsell,  1  Barn.  &  Aid.  68 L  which  is  recognized  authority  upon 
this  branch  of  the  law.  But  on  the  other  hand  it  is  a  principle  of  law, 
as  well  established  as  the  legal  notion  to  which  I  have  referred,  that  the 
minds  of  the  two  parties  must  be  brought  together  by  mutual  com- 
munication. An  acceptance,  which  only  remains  in  the  breast  of  the 
acceptor  without  being  actually  and  by  legal  implication  communicated 
to  the  offerer,  is  no  binding  acceptance.  How,  then,  are  these  elements 
of  law  to  be  harmonized!  in  the  case  of  contracts  formed  by  corres- 
pondence through  the  post? 

I  see  no  better  mode  than  that  of  treating  the  post  office  as  the  agent 
of  both  parties,  and  it  was  so  considered  by  Lord  Romilly  in  Hebb's 
Case,  L.  R.  4  Eq.,  at  page  12,  when  in  the  course  of  his  judgment  he 
said:  "Dunlop  v.  Higgins,  1  H.  L.  Cas.  381,  decides  that  the  posting 
of  a  letter  accepting  an  offer  constitutes  a  binding  contract,  but  the 
reason  of  that  is  that  the  post  office  is  the  common  agent  of  both  par- 
ties." Alderson,  B.,  also  in  Stocken  v.  Collin,  7  Mees.  &  W.,  at  page 
516, — a  case  of  notice  of  dishonour,  and  the  case  referred  to  by  Lord 
Cottenham, — says:  "li  the  doctrine  that  the  post  office  is  only  the 
agent  for  the  delivery  of  the  notice  were  correct,  no  one  could  safel/ 
avail  himself  of  that  mode  of  transmission."  But  if  the  post  office  be 
such  common  agent,  then  it  seems  to  me  to  follow  that,  as  soon  as  the 
letter  of  acceptance  is  delivered  to  the  post  office,  the  contract  ismade 
as  complete  and  final  and  absolutely  binding  as  if  the  acceptor  had  put 


16  OFFER   AND    ACCEPTANCE 

his  letter  into  the  hands  of  a  messenger  sent  by  the  offerer  himself  as 
his  agent  to  deliver  the  offer  and  receive  the  acceptance. 

What  other  principle  can  be  adopted  short  of  holding  that  the  con- 
tract is  not  complete  by  acceptance  until  and  except  from  the  time 
that  the  letter  containing  the  acceptance  is  delivered  to  the  offerer, 
a  principle  which  has  been  distinctly  negatived?  This  difficulty  was 
attempted  to  be  got  over  in  Telegraph  Co,  v.  Colson,  L.  R.  6  Exch. 
108,  which  was  a  case  directly  on  all  fours  with  the  present,  and  in 
which  Kelly,  C.  B.,  at  page  115,  is  reported  to  have  said:  "It  may 
be  that  in  general,  though  not  in  all  cases,  a  contract  takes  effect  from 
the  time  of  acceptance,  and  not  from  the  subsequent  notification  of  it. 
As  in  the  case  now  before  the  court,  if  the  letter  of  allotment  had  been 
delivered  to  the  defendant  in  the  due  course  of  the  post,  he  would 
have  become  a  shareholder  from  the  date  of  the  letter.  And  to  this 
effect  is  Potter  v.  Sanders,  6  Hare,  1.  And  hence  perhaps  the  mistake 
has  arisen  that  the  contract  is  binding  upon  both  parties  from  the  time 
when  the  letter  is  written  and  put  into  the  post,  although  never  deliv- 
ered; whereas,  although  it  may  be  binding  from  the  time  of  accept- 
ance, it  is  only  binding  at  all  when  afterwards  duly  notified." 

But  with  deference  I  would  ask  how  a  man  can  be  said  to  be  a  share- 
holder at  a  time  before  he  was  bound  to  take  any  shares,  or,  to  put  the 
question  in  the  form  in  which  it  is  put  by  Mellish,  L.  J.,  in  Harris' 
Case,  7  Ch.  App.  587,  at  page  596,  how  there  can  be  any  relation  back 
in  a  case  of  this  kind  as  there  may  be  in  bankruptcy.  If,  as  the  lord 
justice  said,  the  contract,  after  the  letter  has  arrived  in  time,  is  to 
be  treated  as  having  been  made  from  the  time  the  letter  is  posted,  the 
reason  is  that  the  contract  was  actually  made  at  the  time^  when  the 
letter  was  posted.  The  principle  indeed  laid  down  in  Harris'  Case,  7 
Ch.  App.  587,  at  page  596,  as  well  as  in  Dunlop  v.  Higgins,  1  H.  L. 
Cas.  381,  can  really  not  be  reconciled  with  the  decision  in  Telegraph 
Co.  v.  Colson,  L.  R.  6  Exch.  108.  James,  L.  J.,  in  the  passage  I  have 
already  quoted,— Harris'  Case,  L.  R.  7  Ch.  592,— affirms  the  proposi- 
tion that  when  once  the  acceptance  is  posted  neither  party  can  after- 
wards escape  from  the  contract,  and  refers  with  approval  to  Hebb's 
Case,  L.  R.  4  Eq.  9.  There  a  distinction  was  taken  by  the  master  of 
the  rolls  that  the  company  chose  to  send  the  letter  of  allotment  to  their 
own  agent,  who  was  not  authorized  by  the  applicant  for  shares  to  re- 
ceive it  on  his  behalf,  and  who  never  delivered  it ;  but  he  at  the  same 
time  assumed  that  if,  instead  of  sending  it  through  an  authorized 
agent,  they  had  sent  it  through  the  post  office,  the  applicant  would  have 
been  bound  although  the  letter  had  never  been  delivered.  Mellish,  L. 
J,,  really  goes  as  far,  and  states  forcibly  the  reasons  in  favour  of  this 
view.  The  mere  suggestion  thrown  out  at  the  close  of  his  judgment, 
at  page  597,  when  stopping  short  of  actually  overruling  the  decision 
in  Telegraph  Co.  v.  Colson,  L.  R.  6  Exch.  108,  that  although  a  contract 
is  complete  when  the  letter  accepting  an  offer  is  posted,  yet  it  may  be 
subject  to  a  condition  subsequent  that,  if  the  letter  does  not  arrive 


COMMUNICATION   OF   ACCEPTANCE  l7 

in  due  course  of  post,  then  the  parties  may  act  on  the  assumption  that 
the  offer  has  not  been  accepted,  can  hardly,  when  contrasted  with  the 
rest  of  the  judgment,  be  said  to  represent  his  own  opinion  on  the 
law  upon  the  subject.  The  contract,  as  he  says,  at  page  596,  is  ac- 
tually made  when  the  letter  is  posted. 

The  acceptor,  in  posting  the  letter,  has,  to  use  the  language  of  Lord 
Blackburn,  in  Brogden  v.  Directors  of  Metropolitan  Railway  Co.,  2 
App.  Cas.  666,  691,  "put  it  out  of  his  control,  and  done  an  extraneous 
act  which  clenches  the  matter,  and  shews  beyond  all  doubt  that  each 
side  is  bound."  How,  then,  can  a  casualty  in  the  post,  whether  result- 
ing in  delay,  which  in  commercial  transactions  is  often  as  bad  as  no 
delivery,  or  in  nondelivery,  unbind  the  parties  or  unmake  the  contract? 
To  me  it  appears  that  in  practice  a  contract  complete  upon  the  accept- 
ance of  an  offer  being  posted,  but  liable  to  be  put  an  end  to  by  an 
accident  in  the  post,  would  be  more  mischievous  than  a  contract  only 
binding  upon  the  parties  to  it  upon  the  acceptance  actually  reaching 
the  oft'erer;  and  I  can  see  no  principle  of  law  from  which  such  an 
anomalous  contract  can  be  deduced. 

There  is  no  doubt  that  the  implication  of  a  complete,  final,  and  ab- 
solutely binding  contract  being  formed,  as  soon  as  the  acceptance  of 
an  offer  is  posted,  may  in  some  cases  lead  to  inconvenience  and  hard- 
ship. But  such  there  must  be  at  times  in  every  view  of  the  law.  It 
is  impossible  in  transactions  which  pass  between  parties  at  a  distance, 
and  have  to  be  carried  on  through  the  medium  of  correspondence,  to 
adjust  conflicting  rights  between  innocent  parties,  so  as  to  make  the 
consequences  of  mistake  on  the  part  of  a  mutual  agent  fall  equally  upon 
the  shoulders  of  both.  At  the  same  time  I  am  not  prepared'  to  admit 
that  the  implication  in  question  will  lead  to  any  great  or  general  in- 
convenience or  hardship.  An  offerer,  if  he  chooses,  may  always  make 
the  formation  of  the  contract  which  he  proposes  dependent  upon  the 
actual  communication  to  himself  of  the  acceptance.  If  he  trusts  to  the 
post  he  trusts  to  a  means  of  communication  which,  as  a  rule,  does  not 
fail,  and  if  no  answer  to  his  offer  is  received  by  him,  and  the  matter 
is  of  importance  to  him,  he  can  make  inquires  of  the  person  to  whom 
his  offer  was  addressed.  On  the  other  hand,  if  the  contract  is  not  final- 
ly concluded,  except  in  the  event  of  the  acceptance  actually  reaching 
the  offerer,  the  door  would  be  opened  to  the  perpetration  of  much 
fraud,  and,  putting  aside  this  consideration,  considerable  delay  in  com- 
mercial transactions,  in  which  despatch  is,  as  a  rule,  of  the  greatest 
consequence,  would  be  occasioned ;  for  the  acceptor  would  never  be 
entirely  safe  in  acting  upon  his  acceptance  until  he  had  received  notice 
that  his  letter  of  acceptance  had  reached  its  dlestination. 

Upon  balance  of  conveniences  and  inconveniences  it  seems  to  mc,  ap- 
plying with  slight  alterations  the  language  of  the  supreme  court  of 
the  United  States  in  Tayloe  v.  Insurance  Co.,  9  Mow.  390,  13  L.  Ed. 
187,  more  consistent  with  the  acts  and  declarations  of  the  parties  in 
this  case  to  consider  the  contract  complete  and  absolutely  binding  on 

TUHOCKM.CONT. — 2 


18  OFFER    AND    ACCEPTANCB 

the  transmission  of  the  notice  of  allotment  through  the  post,  as  the 
medium  of  communication  that  the  parties  themselves  contemplated, 
instead  of  postponing  its  completion  until  the  notice  had  been  re- 
ceived by  the  defendant.  Upon  principle,  therefore,  as  well  as  au- 
thority, I  think  that  the  judgment  of  Lopes,  J.,  was  right  and  should 
be  affirmed,  and  that  this  appeal  should  therefore  be  dismissed. 


IV,  Character,  Mode,  Place,  and  Time  of  Acceptance  • 


ELIASON  et  al.  v.  HENSHAW. 
(Supreme  Court  of  the  United  States,  1819.    4  Wheat.  225,  4  L.  Ed.  556.) 

Washington,  J.  This  is  an  action,  brought  by  the  defendant  in  er- 
ror, to  recover  damages  for  the  non-performance  of  an  agreement, 
alleged  to  have  been  entered  into  by  the  plaintiffs  in  error,  for  the 
purchase  of  a  quantity  of  flour  at  a  stipulated  price.  The  evidence  of 
this  contract  given  in  the  court  below,  is  stated  in  a  bill  of  exceptions, 
and  is  to  the  following  effect:  A  letter  from  the  plaintiffs  to  the  de- 
fendant, dated  the  10th  of  February,  1813,  in  which  they  say:  "Cap- 
tain Conn  informs  us  that  you  have  a  quantity  of  flour  to  dispose  of. 
We  are  in  the  practice  of  purchasing  flour  at  all  times,  in  Georgetown, 
and  will  be  glad  to  serve  you,  either  in  receiving  your  flour  in  store, 
when  the  markets  are  dull,  and  disposing  of  it  when  the  markets  will 
answer  to  advantage,  or  we  will  purchase  at  market  price  when  de- 
livered; if  you  are  disposed  to  engage  two  or  three  hundred  barrels 
at  present,  we  will  give  you  $9.50  per  barrel,  deliverable  the  first  water 
in  Georgetown,  or  any  service  we  can.  If  you  should  want  an  ad^ 
vance,  please  write  us  by  mail,  and  will  send  you  part  of  the  money 
in  advance."  In  a  postscript  they  add:  "Please  write  by  return  of 
wagon  whether  you  accept  our  offer." 

This  letter  was  sent  from  the  house  at  which  the  writer  then  was, 
about  two  miles  from  Harper's  Ferry,  to  the  defendant  at  his  mill,  at 
Mill  Creek,  distant  about  20  miles  from  Harper's  Ferry,  by  a  wagoner 
then  employed  by  the  defendant  to  haul  flour  from  his  mill  to  Har- 
per's Ferry,  and  then  about  to  return  home  with  his  wagon.  He  de- 
livered the  letter  to  the  defendant  on  the  14th  of  the  same  month,  to 
which  an  answer,  dated  the  succeeding  day,  was  written  by  the  de- 
fendant, addressed  to  the  plaintiffs  at  Georgetown,  and  dispatched  by 
a  mail  which  left  Mill  Creek  on  the  19th,  being  the  first  regular  mail 
from  that  place  to  Georgetown.  In  this  letter  the  writer  says :  "Your 
favor  of  the  10th  inst.  was  handed  me  by  Mr.  Chenoweth  last  evening. 

6  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §  21. 


CHAEACTER    MODE,  PLACE,  AND   TIME    OF   ACCEPTANCE  19 

I  take  the  earliest  opportunity  to  answer  it  by  post.  Your  proposal  to 
engage  300  barrels  of  flour,  delivered  in  Georgetown,  by  the  first  wa- 
ter, at  $9.50  per  barrel,  I  accept,  and  shall  send  on  the  flour  by  the 
first  boats  that  pass  down  from  where  my  flour  is  stored  on  the  river ; 
as  to  any  advance,  will  be  unnecessary— payment  on  delivery  is  all 
that  is  required." 

On  the  25th  of  the  same  month,  the  plaintiffs  addressed  to  the  de- 
fendant an  answer  to  the  above,  dated  at  Georgetown,  in  which  they 
acknowledge  the  receipt  of  it,  and  add:  "Not  having  heard  from  you 
before,  had  quite  given  over  the  expectation  of  getting  your  flour, 
more  particularly  as  we  requested  an  answer  by  return  of  wagon  the 
next  day,  and  as  we  did  not  get  it,  had  bought  all  we  wanted." 

The  wagoner,  by  whom  the  plaintiffs'  first  letter  was  sent,  informed 
them,  when  he  received  it,  that  he  should  not  probably  return  to  Har- 
per's Ferry,  and  he  did  not  in  fact  return  in  the  defendant's  employ. 
The  flour  was  sent  down  to  Georgetown,  some  time  in  March,  and 
the  delivery  of  it  to  the  plaintiffs  was  regularly  tendered  and  refused. 
Upon  this  evidence,  the  defend/tits  in  the  court  below,  the  plain- 
tiffs in  error,  moved  that  court  to  instruct  the  jury,  that,  if  they  be- 
lieved the  said  evidence  to  be  true,  as  stated,  the  plaintiff  in  this  action 
was  not  entitled  to  recover  the  amount  of  the  price  of  the  300  barrels 
of  flour,  at  the  rate  of  $9.50  per  barrel.  The  court  being  divided  in 
opinion,  the  instruction  prayed  for  was  not  given. 

The  question  is,  whether  the  court  below  ought  to  have  given  the  ] 
instruction  to  the  jury,  as  the  same  was  prayed  for?    If  they  ought, 
the  judgment,  which  was  in  favor  of  the  plaintiff  in  that  court,  must 
be  reversed. 

It  is  an  undeniable  principle  of  the  law  of  contracts,  that  an  offer  of 
a  bargain  by  one  person  to  another,  imposes  no  obligation  upon  the 
former,  until  it  is  accepted  by  the  latter,  according  to  the  terms  in 
which  the  offer  was  made.  Any  qualification  of,  or  departure  from, 
those  terms,  invalidates  the  offer,  unless  the  same  be  agreed  to  by  the 
person  who  made  it.  Until  the  terms  of  the  agreement  have  received 
the  assent  of  both  parties,  the  negotiation  is  open,  and  imposes  no  ob- 
ligation upon  either.      ,-^ 

In  this  case,  the  plaintiffs  in  error  offered  to  purchase  from  the  de- 
fendant two  or  three  hundred  barrels  of  flour,  to  be  delivered  at 
Georgetown,  by  the  first  water,  and  to  pay  for  the  same  $9.50  per 
barrel.  To  the  letter  containing  this  offer,  they  required  an  answer  by 
the  return  of  the  wagon,  by  which  the  letter  was  dispatched.  This 
wagon  was,  at  that  time,  in  the  service  of  the  defendant,  and  employed 
by  him  in  hauling  flour  from  his  mill  to  Harper's  Ferry,  near  to 
which  place  the  plaintiffs  then  were.  The  meaning  of  the  writers  was 
obvious.  They  could  easily  calculate  by  the  usual  length  of  time 
which  was  employed  by  this  wagon,  in  traveling  from  Harper's  Ferry 
to  Mill  Creek,  and  back  again  with  a  load  of  flour,  about  what  time 
they  should  receive  the  desired  answer,  and,  therefore,  it  was  entirely 


20  OFFER   AND    ACCEPTANCB 

unimportant,  whether  it  was  sent  by  that,  or  another  wagon,  or  in 
any  other  manner,  provided  it  was  sent  to  Harper's  Ferry,  and  was 
not  delayed  beyond  the  time  which  was  ordinarily  employed  by  wag- 
ons engaged  in  hauling  flour  from  the  defendant's  mill  to  Harper's 
Ferry.  Whatever  uncertainty  there  might  have  been  as  to  the  time 
when  the  answer  would  be  received,  there  was  none  as  to  the  place 
to  which  it  was  to  be  sent;  this  was  distinctly  indicated  by  the  mode 
, —  pointed  out  for  the  conveyance  of  the  answer.  The  place,  therefore,  \ 
to  which  the  answer  was  to  be  sent,  constituted  an  essential  part  of  ' 
the  plaintiff's  offer. 

It  appears,  however,  from  the  bill  of  exceptions,  that  no  answer  to 
this  letter  was  at  any  time  sent  to  the  plaintiffs,  at  Harper's  Ferry. 
Their  offer,  it  is  true,  was  accepted  by  the  terms  of  a  letter  addressed 
Georgetown,  and  received  by  the  plaintiffs  at  that  place;  but  an  ac- 
ceptance communicated  at  a  place  different  from  that  pointed  out  by 
the  plaintiffs,  and  forming  a  part  of  their  proposal,  imposed  no  obliga- 
tion binding  upon  them,  unless  they  had  acquiesced  in  it,  which  they 
declined  doing. 

It  is  no  argument,  that  an  answer  was  received  at  Georgetown ;  the 
plaintiffs  in  error  had  a  right  to  dictate  the  terms  upon  which  they 
would  purchase  the  flour,  and,  unless  they  were  complied  with,  they 
were  not  bound  by  them.  .  All  their  arrangements  may  have  been  made 
with  a  view  to  the  circumstance  of  place,  and  they  were  the  only 
judges  of  its  importance.  There  was,  therefore,  no  contract  concluded 
I  between  these  parties;  and  the  court  ought,  therefore,  to  have  given 
/    the  instruction  to  the  jury,  which  was  asked  for. 

Judgment  reversed.     Cause  remanded,  with  directions  to  award  a 
^venire  facias  de  novo. 


V.  Revocation  of  Offer  ' 


IDE  V.  LEISER. 

(Supreme  Court  of  Montana,  1890.     10  Mont.  5,  24  Pac.  695, 
24  Am.   St.  Rep.  17.) 

The  plaintiff  pleads  the  following  instrument  in  writing: 
"For  and  in  consideration  of  one  dollar  ($1.00)  to  me  in  hand 
paid,  I  hereby  agree  to  give  Frank  L.  Ide  the  sole  right  and  option  to 
purchase  from  me  at  any  time  within  ten  days  from  the  date  of  this 
instrument  the  following  described  property,  to-wit,  [describing  the 
property.]  I  furthermore  agree  to  furnish  a  good  and  sufficient  deed 
of  conveyance  of  said  property,  and  of  the  whole  thereof.    The  price 

f  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  22,  23. 


REVOCATION   OF  OFTEB  21 

of  said  property  to  be  one  thousand  dollars,  ($1,000.)     Helena,  Mon- 
tana, September  24,  1889.    J.  J.  Leiser. 

"I  hereby  extend  the  above  option  for  a  period  of  ten  days  from 
this  date.    Helena,  Oct.  3rd,  1889.    J.  J.  Leiser." 

The  complaint  further  sets  forth  that  on  October  11,  1889,  the 
plaintiff  tendered  defendant  $1,000,  and  demanded  a  conveyance  of 
the  property ;  that  defendant  refused  to  give  the  conveyance  and  still 
refuses;  that  plaintiff  is  still  willing  to  pay  said  $1,000.^  Plaintiff  de- 
mands judgment  that  defendant  make  conveyance  to  him  of  the  real 
estate  described.  The  defendant  demurred  to  the  complaint  on  the 
ground  that  it  did  not  set  forth  facts  sufficient  to  constitute  a  cause 
of  action.  Demurrer  was  sustained,  and  judgment  entered  for  the 
defendant.    Plaintiff  appeals  from  the  judgment. 

The  question  raised  by  the  record,  and  discussed  by  counsel,  is 
whether  the  instrument  in  writing  pleaded,  and  the  tender  of  $1,000 
by  plaintiff  to  defendant,  October  11,  1889,  are  sufficient  to  entitle 
plaintiff  to  a  conveyance  as  demanded.  No  tender  of  money  or  de- 
mand for  a  deed  was  made  during  the  10  days  limited  in  the  original 
instrument ;  but  were  made  during  the  period  defined  in  the  extension 
indorsed  on  the  instrument. 

De  Witt,  J.,^  (after  stating  the  facts  as  above.)  For  convenience 
of  terms  we  will  designate  the  original  document  pleaded  as  the  first 
instrument,  and  the  option  therein  as  the  first  option,  and  the  indorse- 
ment extending  the  time  as  the  second  instrument  and  option.  We 
will  not  discuss  the  validity  of  the  first  instrument  as  a  foundation  for 
an  action  for  specific  performance.  We  will  assume,  for  the  purpose 
of  this  decision,  that  it  is  good.  The  option  assumed  to  be  granted 
therein  was  not  exercised  within  the  time  limited,  and  expired  October 
4.  The  consideration  for  this  option  was  one  dollar,  whether  paid  by 
Ide  to  Leiser,  or  still  a  debt  owing  from  Ida  to  Leiser,  is  immaterial. 
That  consideration  was  exhausted  by  the  expiration  of  the  option  on 
October  4.  Ide  paid  his  money,  the  one  dollar,  and  received  his  goods, 
the  option.  Leiser  took  the  one  dollar,  and  delivered  a  consideration 
therefor,  viz.,  the  option.  The  transaction  was  complete,  and  the 
terms  performed  by  each  party  to  the  agreement. 

We  come  to  the  second  instrument  and  option.  No  consideration 
is  named  therein,  specifically  or  by  reference.  The  consideration  for 
the  first  option  cannot  do  service  for  the  second.  That  consideration 
was  functus  officio  in  the  first  instrument.  A  consideration  deter- 
mined by  the  parties  to  be  the  consideration  for  the  sale  of  one  article 
on  one  day,  and  so  declared  in  writing,  cannot,  in  the  face  of  such 
declaration,  be  construed  by  the  court  as  a  declaration  for  the  sale  of 
another  article  on  another  day.  The  first  10  days'  option  was  a  thing 
of  value,  and  paid  for  as  such.  The  second  was  another  separate 
valuable  article.     Was  there  any  consideration  for  its  sale?    We  be- 

•  A  portion  of  the  opinion  Is  omitted. 


22  OFFER    AND    ACCEPTANCE 

Heve  the  same  definitions  and  distinctions  will  aid  this  discussion. 
There  may  be  (1)  a  sale  of  lands;  (2)  an  agreement  to  sell  lands; 
and  (3)  what  is  popularly  called  an  "option." 

The  first  is  the  action  transfer  of  title  from  grantor  to  grantee  by 
appropriate  instrument  of  conveyance.  The  second  is  a  contract  to  be 
performed  in  the  future,  and  if  fulfilled  results  in  a  sale.  It  is  a  pre- 
liminary to  a  sale,  and  is  not  the  sale.  Breaches,  rescission,  or  release 
may  occur  by  which  the  contemplated  sale  never  takes  place.  The 
third,  an  option  originally,  is  neither  a  ?ale  nor  an  agreement  to  sell. 
It  is  simply  a  contract  by  which  the  owner  of  property  (real  estate 
being  the  species  we  are  now  discussing)  agrees  with  another  person 
that  he  shall  have  the  right  to  buy  his  property,  at  a  fixed  price,  within 
a  time  certain.  He  does  not  sell  his  land;  he  does  not  then  agree  to 
sell  it;  but  he  does  then  sell  something,  viz.,  the  right  or  privilege  to 
buy  at  the  election  or  option  of  the  other  party.  The  second  party 
gets,  in  prcesenti,  not  lands,  or  an  agreement  that  he  shall  have  lands, 
but  he  does  get  something  of  value ;  that  is,  the  right  to  call  for  and 
receive  lands  if  he  elects.  The  owner  parts  with  his  right  to  sell 
his  lands,  except  to  the  second  party,  for  a  limited  period.  The  sec- 
ond party  receives  this  right,  or  rather,  from  his  point  of  view,  he 
receives  the  right  to  elect  to  buy.  That  which  the  second  party  re- 
ceives is  of  value,  and  in  times  of  rapid  inflations  of  prices,  perhaps 
of  great  value. 

A  contract  must  be  supported  by  a  consideration,  whether  it  be  the 
actual  sale  of  lands,  an.  agreement  to  sell  lands,  or  the  actual  sale 
of  the  right  to  demand  the  conveyance  of  lands.  A  present  convey- 
ance of  lands  is  an  executed  contract.  An  agreement  to  sell  is  an 
executory  contract.  The  sale  of  an  option  is  an  executed  contract; 
that  is  to  say,  the  lands  are  not  sold;  the  contract  is  not  executed  as 
to  them ;  but  the  option  is  as  completely  sold  and  transferred  in  prae- 
senti  as  a  piece  of  personal  property  instantly  delivered  on  payment  of 
the  price.  Now  this  option,  this  article  of  value  and  of  commerce,  must 
have  a  consideration  to  support  its  sale.  As  it  is  distinct  from  a  sale 
of  lands,  or  an  agreement  to  sell  lands,  so  its  consideration  must  be 
distinct;  although,  if  a  sale  of  the  lands  afterwards  follows  the  op- 
tion, the  consideration  for  the  option  may  be  agreed  to  be  applied,  and 
often  is,  as  a  part  payment  on  the  price  of  the  land.  But  there  must 
be  some  consideration  upon  which  the  finger  may  be  placed,  and  of 
which  it  may  be  said,  "This  was  given  by  the  proposed  vendee  to  the 
proposed  vendoi  of  the  lands  as  the  price  for  the  option,  or  privilege 
to  purchase." 

We  have  been  led  into  this  endeavor  to  make  clear  our  views  of 
these  distinctions,  because,  in  the  argument,  counsel  did  not  seem  to 
give  them  as  much  weight  as  they  seem  to  us  to  demand.  We  refer  to 
the  following  authorities:  Gordon  v.  Darnell,  5  Colo.  302;  Bradford 
V.  Foster,  87  Tenn.  4,  9  S.  W.  195 ;  Railroad  Co.  v  Bartlett,  3  Cush. 
(Mass.)  224;    Bean  v.  Burbank,  16  Me.  458,  33  Am.  Dec.  681;    De 


REVOCATION    OF   OFFEB  23 

Rutte  V.  Muldrow,  16  Cal.  505;  Johnston  v.  Trippe  (C.  C.)  33  Fed. 
530;  Thomason  v.  Dill,  30  Ala.  444;  Mers  v.  Insurance  Co.,  68  Mo. 
127;  Thorne  v.  Deas,  4  Johns.  (N.  Y.)  84;  Burnet  v.  Biscoe,  4 
Johns.  (N.  Y.)"235;  Lees  v.  Whitcomb,  5  Bing.  34;  Bish.  Cont.  §§ 
77,  78;  McDonald  v.  Bewick,  51  Mich.  79,  16  N.  W.  240;  Schroeder 
V.  Gemeinder,  10  Nev.  356;  Woodruff  v.  Woodruff,  44  N.  J.  Eq. 
355,  16  Atl.  4,  1  L.  R  A.  380;  Perkins  v.  Hadsell,  50  111.  216;  Wat. 
Spec.  Perf.  §  200. 

Examine  the  two  options  granted  in  the  case  before  us.  L.  sold  I. 
an  option  for  10  days  from  September  24th  for  one  dollar.  He  then 
gives  an  option  for  another  10  days  from  October  3d,  for  what?  For 
nothing.  L.  transfers  this  option,  this  incorporeal  valuable  something, 
for  nothing.  The  transfer  of  the  option  was  nudum  pactum,  and  void. 
But,  the  point  just  discussed  being  conceded,  appellant  still  contends 
that  this  second  instrument  or  option  was  a  continuing  offer  to  sell,  at 
a  given  price,  and  was  accepted  by  respondent  before  retracted,  and 
that  such  acceptance,  evidenced  by,  and  accompanied  with,  the  tender 
of  the  price,  and  demand  for  a  deed,  constitute  an  agreement  to  sell 
land,  which  may  be  enforced  in  equity.  We  leave  behind  now  our 
views  of  options,  and  consideration  therefor,  and  meet  a  wholly  dif- 
ferent proposition. 

Reading  the  two  instruments  together  we  find  that  on  October  3d 
L.  extended  to  I.  an  offer  to  sell  his  lands  at  the  price  of  $1,000. 
There  was  no  consideration  for  the  offer,  and  it  could  have  been  nulli- 
fied by  L.  at  any  time  by  withdrawal.  But  it  was  accepted  by  I.,  while 
outstanding,  the  price  tendered,  and  deed  demanded.  It  must  be  plain 
from  the  previous  discussion  that  we  do  not  hold  that  the  offer,  wher. 
made,  or  at  any  moment  before  acceptance,  was  a  sale  of  lands,  an 
agreement  to  sell  lands,  or  an  option.  But  upon  acceptance  and  tender 
was  not  a  contract  completed?  If  one  person  offers  to  another  to 
sell  his  property  for  a  named  price,  and  while  the  oft'er  is  unretracted 
the  other  accepts,  tenders  the  money,  and  demands  the  property,  that 
is  a  sale.  The  proposition  is  elementary.  The  property  belongs  to  the 
vendee,  and  the  money  to  the  vendor.  Such  is  precisely  the  situation 
of  the  parties  herein.  L.  oft'ered  to  sell  for  $1,000,  I.  accepted,  ten- 
dered the  price,  and  demanded  the  property.  Every  element  of  a 
contract  was  present,  parties,  subject-matter,  consideration,  .Tneeting  of 
the  minds,  and  mutuality.  And  as  to  the  matter  of  mutuality  we  arc 
now  beyond  the  defective  option.  We  have  simply  an  offer  at  a  price 
acceptance,  payment  or  tender,  and  demand.  That  this  was  a  valid 
contract  we  cannot  for  a  moment  doubt. 

In  discussing  a  transaction  of  this  nature,  in  Gordon  v.  Darnell,  5 
Colo.  304,  Beck,  C.  J.,  in  one  of  his  clear  opinions,  says:  "Its  legal 
effect  is  that  of  a  continuing  offer  to  sell,  which  is  capable  of  being 
converted  into  a  valid  contract  by  a  tender  of  the  purchase  money,  or 
performance  of  its  conditions,  whatever  they  may  be,  within  (he  time 
stated,  and  before  the  seller  withdraws  the  offer  to  sclh"     Luiton    J  . 


24  OFFER   AND    ACCEPTANCE 

in  Bradford  v.  Foster,  87  Tenn.  8,  9  S.  W.  195,  says :  "Before  accept- 
ance, such  an  agreement  can  be  regarded  only  as  an  offer  in  writing  to 
sell  upon  specified  terms  the  lands  referred  to.  Such  an  offer,  if 
based  upon  no  consideration,  could  be  withdrawn  by  the  seller  at  any 
time  before  acceptance.  It  is  the  acceptance  while  outstanding  which 
gives  an  option,  not  given  upon  a  consideration,  vitality."  In  Railroad 
Co.  V.  Bartlett,  3  Cush.  (Mass.)  227,  we  find  the  following,  by  Fletch- 
er, J. :  "In  the  present  case,  though  the  writing  signed  by  the  defend- 
ants was  but  an  offer,  and  an  offer  that  might  be  revoked,  yet  while  it 
remained  in  force  and  unrevoked  it  was  a  continuing  offer  during  the 
time  limited  for  acceptance,  and  during  the  whole  of  that  time  it  was 
an  offer  every  instant ;  but  as  soon  as  it  was  accepted  it  ceased  to  be 
an  oft"er  merely,  and  then  ripened  into  a  contract." 

This  case  readily  distinguishes  Bean  v.  Burbank,  16  Me.  458,  33 
Am.  Dec.  681,  which  may  seem  to  hold  a  contrary  doctrine.  It  also 
repudiates  Cooke  v.  Oxley,  3  Term.  R.  653,  and  claims  that  the  Eng- 
lish case  is  said  to  be  inaccurately  reported,  and,  in  any  event,  entirely 
disregarded  in  the  later  decisions.     *     *     * 

The  judgment  of  the  district  court  is  reversed,  and  the  cause  is  re- 
manded, with  directions  to  that  court  to  overrule  the  demurrer. 


VI.  Lapse  of  Offer 


MINNESOTA  LINSEED  OIL  CO.  v.  COLLIER  WHITE 

LEAD  CO. 

(United  States  Circuit  Court,  D.  :Miiinesota,  1876.     4  Dill.  431, 
17  Fed.   Cas.   No.  9,6.35.) 

This  action  was  removed  from  the  state  court  and  a  trial  by  jury 
waived.  TJie^^plaintiff  seeks  to  recover  the  sum  of  $2,151.50,  with 
interest  from  September  20,  1875 — a  balance  claimed  to  be  due  for  oil- 
soldTto  the  defendant.  The  defendant,  in  its  answer,  alleges  that  on 
August"  3d,  187$,  a  contract  was  entered  into  between  the  parties, 
whereby  the  plaintiff  agreed  to  sell  and  deliver  to  the  defendant,  at 
the  city  of  St.  Louis,  during  the  said  month  of  August,  twelve  thou- 
sand four. hundred  and  fifty  (12,450)  gallons  of  linseed  oil  for  the 
price  of  fifty-eight  (58)  cents  per  gallon,  and  that  the  plaintiff  has 
neglected  and  refused  to  deliver  the  oil  according  to  the  contract ;  that 
the  market  value  of  oil  after  August  3d  and  during  the  month  was  not 
less  than  seventy  (70)  cents  per  gallon,  and  therefore  claims  a  set-off 
or  counter-claim  to  plaintiff's  cause  of  action.  The  reply  of  the  plain- 
tiff denies  that  any  contract  was  entered  into  between  it  and  defendant. 

»  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §  24. 


LAPSE   OF   OFFEB  25 

The  plaintiff  resided  at  Minneapolis,  Minnesota,  and  the  defendant 
was  the  resident  agent  of  the  plaintiff,  at  St.  Louis,  Missouri.  The 
contract  is  alleged  to  have  been  made  by  telegraph. 

The  plaintiff  sent  the  following  dispatch  to  the  defendant:  "Minne- 
apolis, July  29,  1875.  To  Alex.  Easton,  Secretary  Colder  White  Lead 
Company,  St.  Louis,  Missouri:  Account  of  sales  not  enclosed  in 
yours  of  27th.  Please  wire  us  best  oft'er  for  round  lot  named  by  you 
— one  hundred  barrels  shipped.     Minnesota  Linseed  Oil  Company." 

The  following  answer  was  received:  "St.  Louis,  Mo.,  July  30,  1875. 
To  the  Minnesota  Linseed  Oil  Company:  Three  hundred  barrels 
fifty-five  cents  here,  thirty  days,  no  commission,  August  delivery. 
Answer.    Collier  Company." 

The  following  reply  was  returned:  "Minneapolis,  July  31,  1875. 
Will  accept  fifty-eight  cents  (58c),  on  terms  named  in  your  telegram. 
Minnesota  Linseed  Oil  Company." 

This  dispatch  was  transmitted  Saturday,  July  31,  1875,  at  9:15 
p.  m.,  and  was  not  delivered  to  the  defendant  in  St.  Louis,  until  Mon- 
day morning,  August  2,  between  eight  and  nine  o'clock. 

On  Tuesday,  August  3,  at  8j53  a.  m.,  the  following  dispatch  was 
deposited  for  transmission  in  the  telegraph  office:  "St.  Louis,  Mo., 
August  3,  1875.  To  Minnesota  Linseed  Oil  Company,  Minneapolis: 
Offer  accepted — ship  three  hundred  barrels  as  soon  as  possible.  Col- 
lier Company." 

The  following  telegrams  passed  between  the  parties  after  the  last 
one  was  deposited  in  the  office  at  St.  Louis:  "Minneapolis,  August  3, 
1875.  To  Collier  Company,  St.  Louis :  We  must  withdraw  our  offer 
wired  July  31st.    Minnesota  Linseed  Oil  Company." 

Answered:  "St.  Louis,  August  3,  1875.  Minnesota  Linseed  Oil 
Company:  Sale  effected  before  your  request  to  withdraw  was  re- 
ceived.   When  will  you  ship?    Collier  Company." 

It  appeared  that  the  market  was  very  much  unsettled,  and  that  the 
price  of  oil  was  subject  to  sudden  fluctuations  during  the  month  pre- 
vious and  at  the  time  of  this  negotiation,  varying  from  day  to  day, 
and  ranging  between  fifty-five  and  seventy-five  cents  per  gallon.  It 
is  urged  by  the  defendant  that  the  dispatch  of  Tuesday,  August  3d. 
1875,  accepting  the  offer  of  the  plaintiff  transmitted  July  31st,  and 
delivered  Monday  morning,  August  2d,  concluded  a  contract  for  the 
sale  of  the  twelve  thousand  four  hundred  and  fifty  gallons  of  oil. 
The  plaintiff,  on  the  contrary,  claims,  1st,  that  the  dispatch  accepting 
the  pioposition  made  July  31st,  was  not  received  until  after  the  offer 
had  been  withdrawn ;  2d,  that  the  acceptance  of  the  offer  was  not  in 
due  time ;  that  the  delay  was  unreasonable,  and  therefore  no  contract 
was  completed. 

Nelson,  District  Judge.  It  is  well  settled  by  the  authorities  in  this 
country,  and  sustained  by  the  later  English  decisions,  that  there  is  no 
difference  in  the  rules  governing  the  negotiation  of  contracts  by  cor- 
respondence through  the  post-office  and  by  telegraph,  and  a  contract 


26  OFFER    AND    ACCEPTANCE 

is  concluded  when  an  acceptance  of  a  proposition  is  deposited  in  the 
/telegraph  office  for  transmission.     See  14  Am.  Law  Reg.  401,  "Con- 
tracts by  Telegraph,"  article  by  Judge  Redfield,  and  authorities  cited ; 
also,  Trevor  v.  Wood,  36  N.  Y.  307,  93  Am.  Dec.  511. 

The  reason  for  this  rule  is  well  stated  in  Adams  v.  Lindsell,  1  Barn. 
&  Aid.  681.  The  negotiation  in  that  case  was  by  post.  The  court 
said :  "That  if  a  bargain  could  not  be  closed  by  letter  before  the  an- 
swer was  received,  no  contract  could  be  completed  through  the  medi- 
um of  the  post-office ;  that  if  the  one  party  was  not  bound  by  his  oftei 
when  it  was  accepted  (that  is,  at  the  time  the  letter  of  acceptance  is 
deposited  in  the  mail),  then  the  other  party  ought  not  to  be  bound 
until  after  they  had  received  a  notification  that  the  answer  had  been 
received  and  assented  to,  and  that  so  it  might  go  on  ad  infinitum." 
See,  also,  Hamilton  v.  Lycoming  Mut.  Ins.  Co.,  5  Pa.  339 ;  Vassar  v. 
Camp,  11  N.  Y.  441;  Mactier  v.  Frith,  6  Wend.,  (N.  Y.)  103,  21 
Am.  Dec.  262;  Abbott  v.  Shepard,  48  N.  H.  14;  8  C.  B.  225.  In  the 
case  at  bar  the  delivery  of  the  message  at  the  telegraph  office  signified 

''the  acceptance  of  the  offer.  If  any  contract  was  entered  into,  the 
meeting  of  minds  was  at  8 :53  of  the  clock,  on  Tuesday  morning,  Au- 
gust 3d,  and  the  subsequent  dispatches  are  out  of  the  case.  1  Pars. 
Cont.  482,  483. 

This  rule  is  not  strenuously  dissented  from  on  the  argument,  and 
it  is  substantially  admitted  that  the  acceptance  of  an  offer  by  letter  or 
by  telegraph  completes  the  contract,  when  such  acceptance  is  put  in  the 
proper  and  usual  way  of  being  communicated  by  the  agency  em- 
ployed to  carry  it ;    and  that  when  an  offer  is  made  by  telegraph,  an 

^  acceptance  by  telegraph  takes  effect  when  the  dispatch  containing  the 
acceptance  is  deposited  for  transmission  in  the  telegraph  office,  and 
not  when  it  is  received  by  the  other  party.  Conceding  this,  there  re- 
mains only  one  question  to  decide,  which  will  determine  the  issues: 
Was  the  acceptance  of  defendant  deposited  in  the  telegraph  office 
Tuesday,  August  3d,  within  a  reasonable  time,  so  as  to  consummate  a 
contract  binding  upon  the  plaintiff? 

It  is  undoubtedly  the  rule  that  when  a  proposition  is  made  under 
the  circumstances  in  this  case,  an  acceptance  concludes  the  contract 
if  the  offer  is  still  open,  and  the  mutual  consent  necessary  to  convert 
the  offer  of  one  party  into  a  binding  contract  by  the  acceptance  of  the 
other  is  established,  if  such  acceptance  is  within  a  .reasonable  time 
after  the  off'er  was  received. 

The  better  opinion  is,  that  what  is,  or  is  not,  a  reasonable  time,  must 
depend  upon  the  circumstances  attending  the  negotiation,  and  the 
character  of  the  subject  matter  of  the  contract,  and  in  no  better  way 
can  the  intention  of  the  parties  be  determined.  If  the  negotiation  is 
in  respect  to  an  article  stable  in  price,  there  is  not  so  much  reason  for 
an  immediate  acceptance  of  the  offer,  and  the  same  rule  would  not 
apply  as  in  a  case  where  the  negotiation  related  to  an  article  subject 
to  sudden  and  great  fluctuations  in  the  market. 


OFFEES  TO   THE   PUBLIC   GENERALLY  27 

The  rule  in  regard  to  the  length  of  the  time  an  offer  shall  continue,  , 
and  when  an  acceptance  completes  the  contract,  is  laid  down  in  Par- 
sons on  Contracts  (volume  1,  p.  482).  He  says:  "It  may  be  said  that 
whether  the  offer  be  made  for  a  time  certain  or  not,  the  intention  or 
understanding  of  the  parties  is  to  govern.  *  *  *  If  no  definite 
time  is  stated,  then  the  inquiry  as  to  a  reasonable  time  resolves  itself 
into  an  inquiry  as  to  what  time  it  is  rational  to  suppose  the  parties  1 
contemplated;'  and  the  law  will  decide  this  to  be  that  time  which  as 
rational  men  they  ought  to  have  understood  each  other  to  have  had 
in  mind."  Applying  this  rule,  it  seems  clear  that  the  intention  of  the 
plaintiff,  in  making  the  offer  by  telegraph,  to  sell  an  article  which  • 
fluctuates  so  much  in  price,  must  have  been  upon  the  understanding 
that  the  acceptance,  if  at  all,  should  be  immediate,  and  as  soon  after 
the  receipt  of  the  offer  as  would  give  a  fair  opportunity  for  consider 
ation.  /m  'dSLY  'here  was  too  long,  and  manifestly  unjust  to  thi 
plaintiff,  for  it  afforded  the  defendant  an  opportunity  to  take  advan- 
tage of  a  change  in  the  market,  and  accept  or  refuse  the  offer  as 
would  best  subserve  its  interests. 

Judgment  will  be  entered  in  favor  of  the  plaintiff  for  the  amount 
claimed.    The  counter-claim  is  denied.    Judgment  accordingly. 


et 


VII.  Offers  to  the  Public  Generally  ^* 


BROADNAX  v.  LEDBETTER. 

(Supreme  Court  of  Texas,  1907.     100  Tex.  375,  99  S.  W.  1111, 
9  L.  R.  A.   [N.   S.]  1057.) 

Action  by  S.  H.  Broadnax  against  A.  L.  Ledbetter.  Judgment  for 
defendant,  and  plaintiff  appeals.  Questions  certified  by  the  Court  of 
Civil  Appeals  to  the  Supreme  Court. 

Williams,  J.  This  case  is  sent  up  by  the  Court  of  Civil  Appeals 
for  the  third  district  upon  the  following  certificate : 

"The  Court  of  Civil  Appeals  of  the  Third  Supreme  Judicial  Dis- 
trict of  the  state  of  Texas  certifies  that  the  above-styled  and  numbered 
cause  is  now  pending  on  appeal  in  this  court,  and  states  that  the  cause 
of  action  asserted  by  the  appellant  against  appellee  is  set  out  in  plain- 
tiff's original  petition,  which  is  as  follows: 

"  'State  of  Texas,  County  of  Dallas.  In  the  County  Court  of  Dallas 
County,  Texas.  To  the  Honorable  Judge  of  Said  Court:  Your  pe- 
titioner' S.  H.  Broadnax,  who  is  a  resident  citizen  of  Dallas  County, 
Tex.,  hereinafter  called  "plaintiff,"  complaining  of  A.  L.  Ledbetter, 
who  resides  in  Dallas  county,  Texas,  hereinafter  called  "defendant," 

10  For  dLscussIpn  of  iirinciplcs,  see  CiarK  on  Contracts  (2d  Kd.)  §  23. 


28  OFFER   AND    ACCEPTANCE 

respectfully  shows  to  the  court:  That  defendant  is  now  and  was  on 
the  dates  hereinafter  mentioned  the  duly  elected,  qualified,  and  acting 
sheriff  of  Dallas  county,  Tex.,  that  heretofore,  to  wit,  on  or  about  the 
21st  day  of  December,  1904,  one  Holly  Vann  was,  in  the  criminal  dis- 
trict court  of  Dallas  county,  Tex.,  duly  convicted  of  murder  in  the 
first  degree,  and  his  punishment  assessed  at  death ;  that  from  the  date 
of  conviction,  as  aforesaid,  until  the  25th  day  of  January,  1905,  said 
Vann  was  a  prisoner  in  the  custody  of  said  defendant,  as  sheriff  of 
Dallas  county,  Tex.,  and  was  confined  in  the  county  jail  of  said  county ; 
that  on  said  last-named  date,  and  pending  the  appeal  of  said  case  of  said 
Vann  to  the  Court  of  Criminal  Appeals  of  the  state  of  Texas,  he,  the 
said  Vann,  by  some  method  and  means  unknown  to  plaintiff,  effected 
his  escape  from  said  jail,  and  from  the  custody  of  said  defendant,  and 
remained  at  large,  a  fugitive  from  justice,  until  the  evening  of  the 
25th  day  of  January,  1905 ;  that  after  the  escape  of  ,the  said  prisoner, 
Vann,  and  during  the  time  he  was  at  large,  a  fugitive  from  justice, 
said  defendant  did  make,  and  cause  to  be  made,  publish,  and  cause  to 
be  published,  circulate,  and  cause  to  be  circulated,  an  offer,  to  the 
effect  that  he,  the  said  defendant,  would  pay  as  a  reward  the  sum  of 
$500  to  any  party  or  parties  who  would  recapture  the  said  prisoner, 
Vann,  and  return  him  to  the  Dallas  county  jail,  from  which  he  es- 
caped, or  to  any  other  jail  or  jailer  in  the  state  of  Texas ;  that  said 
offer  to  pay  such  reward  was  made  to  the  public  generally — that  is, 
to  any  person  or  persons  who  would  capture  the  said  prisoner  and  re- 
turn him  to  custody,  as  aforesaid,  and  was  not  made  to  any  special 
person  or  officer — that  subsequent  to  the  making,  publishing,  and  cir- 
culating of  said  offer  to  pay  such  reward,  and  in  conformity  therewith 
and  before  the  revocation  thereof,  said  plaintiff  did  on,  to  wit,  the 
25th  day  of  January,  1905,  recapture,  restrain,  hold,  and  return  the 
said  prisoner,  Vann,  for  whose  capture  said  reward  was  offered,  to 
the  custody  of  said  defendant,  and  to  the  county  jail  of  Dallas  county, 
Tex.,  and  there  delivered  said  prisoner  to  the  custody  of  said  defend- 
ant, and  performed  all  the  conditions  contained  in  said  offer  to  pay 
such  reward;  that  by  reason  of  the  premises  and  the  full  perform- 
ance by  plaintiff  of  the  services  for  which  said  reward  was  offered 
said  plaintiff  is  entitled  to  said  reward,  and  said  defendant  became 
liable  to  plaintiff,  and  promised  to  pay  plaintiff  the  full  amount  there- 
of, to  wit,  $500;  that,  though  often  requested,  defendant  has  failed 
and  refused,  and  still  fails  and  refuses,  to  pay  the  same  or  any  part 
thereof,  to  plaintiff's  damage  in  the  sum  of  $500.  Wherefore  your 
petitioner  prays  for  citation  hereon,  as  required  by  law,  and  upon 
final  hearing  for  judgment  for  the  sum  of  $500  and  for  cost  of  suit, 
and  for  general  and  special  relief.'  — ^*s--^. 

"In  the  trial  court  the  appellee  interposed  demurrers  on  the  ground 
that  the  petition  stated  no  cause  of  action,  because  it  was  not  alleged 
that  the  plaintiff  had  knowledge  or  notice  of  the  reward  when  the  es- 
caped prisoner  was  captured  and  returned  to  jail  by  the  plaintiff'. 


<^  OFFERS  TO   THE   PUBLIC   GENERALLY  29 

These  demurrers  were  by  the  court  sustained,  and,  plaintiff  declining 
to  j,mend,  judgment  was  entered  dismissing  plaintiff's  case,  with  a 
judgment  against  him  for  all  costs,  etc.  In  view  of  the  above  state- 
ment, we  propound  the  following  question :  Was  notice  or  knowledge 
to  plaintiff  of  the  existence  of  the  reward  when  the  recapture  was 
made  essential  to  his  right  to  recover?" 

Upon  the  question  stated  there  is  a  conflict  among  the  authorities 
in, other  states.  All  that  have  been  cited  or  found  by  us  have  received 
due  consideration,  and  our  conclusion  is  that  those  holding  the  affirm- 
ative are  correct.  The  liability  for  a  reward  of  this  kind  must  be 
created,  if  at  all,  by  contract.  ^There  is  no  rule  of  law  which  imposes 
it  except  that  which  enforces  contracts  voluntarily  entered  into.  A 
mere  offer  or  promise  to  pay  does  not  give  rise  to  a  contract.  That 
requires  the  assent  or  meeting  of  two  minds,  and  therefore  is  not  com- 
plete until  the  offer  is  accepted.  Such  an  oft'er  as  that  alleged  may  be 
accepted  by  any  one  who  performs  the  service  called  for  when  the  ac- 
ceptor knows  that  it  has  been  made  and  acts  in  performance  of  it,  but 
not  otherwise.  He  may  do  such  things  as  are  specified  in  the  oft'er, 
but,  in  so  doing,  does  not  act  in  performance  of  it,  and  therefore  does 
not  accept  it,  when  he  is  ignorant  of  its  having  been  made.  There  is 
no  such  mutual  agreement  of  minds  as  is  essential  to  a  contract.  The 
offer  is  made  to  any  one  who  will  accept  it  by  performing  the  specified 
acts,  and  it  only  becomes  binding  when  another  mind  has  embraced 
and  accepted  it.  The  mere  doing  of  the  specified  things  without  ref-,> 
^  erence  to  the  offer  is  not  the  consideration  for  which  it  callsri  This  is 
the  theory  of  the  authorities  which  we  regard  as  sound.  Pollock  on 
Contracts,  20;  Anson  on  Contracts,  41;  Wharton  on  Contracts,  §§ 
24,  507;  Story  on  Contracts  (5th  Ed.)  493;  Page  on  Contracts,  § 
32 ;  9  Cyc.  Law  &  Proc.  254 ;  29  Am.  &  Eng.  Ency.  Law,  956.  The 
decisions  of  the  courts  upon  the  question  are  cited  by  the  authors 
referred  to. 

Some  of  the  authorities  taking  the  opposite  view  seem  to  think  that 
the  principles  of  contracts  do  not  control  the  question,  and  in  one 
of  them,  at  least,  it  is  said  that  "the  sum  offered  is  but  a  boon,  gratui- 
ty, or  bounty,  generally  offered  in  a  spirit  of  liberality,  and  not  as  a 
mere  price,  or  a  just  equivalent  simply  for  the  favor  or  service  re- 
quested, to  be  agreed  or  assented  to  by  the  person  performing  it,  but, 
.when  performed  by  him,  as  justly  and  legally  entitling  him  to  a  fulfill- 
ment of  the  promise,  without  any  regard  whatever  to  the  motive  or 
inducement  which  prompted  him  to  perform  it."  Eagle  v.  Smith,  4 
Houst.  (Del.)  293.  But  the  law  does  not  force  persons  to  bestow 
boons,  gratuities,  or  bounties  merely  because  they  have  promised  to 
do  so.  They  must  be  legally  bound  before  that  can  be  done.  It  may 
be  true  that  the  motive  of  the  performer  in  rendering  service  is  not 
of  controlling  effect,  as  is  said  in  some  of  the  authorities  above  cited 
in  pointing  out  the  misapprehension  of  the  case  of  Williams  v.  Car- 
wardine,  6  English  Ruling  Cases,  133,  into  which  some  of  the  courts 


30  OFFER   AND    ACCEPTANCE  * 

have  fallen.  But  this  does  not  reach  the  question  whether  or  not  a 
contractual  obligation  is  essential. 

Other  authorities  say  that  it  is  immaterial  to  the  offerer  that  the 
person  doing  that  which  the  offer  calls  for  did  not  know  bf  its  exist- 
ence ;  that  the  services  are  as  valuable  to  him  when  rendered  without 
as  when  rendered  with  knowledge.  Dawkins  v.  Sappington,  26  Ind. 
199;  Auditor  v.  Ballard,  9  Bush  (Ky.)  572,  15  Am.  Rep.  728.  But 
the  value  to  the  offerer  of  the  acts  done  by  the  other  party  is  not  the 
test.  They  may  in  supposable  cases  be  oi  no  value  to  him,  or  may  be 
no  more  valuable  to  him  than  to  the  person  doing  them.  He  is  respon- 
sible, if  at  all,  because,  by  his  promise,  he  has  induced  another  to  do 
the  specified  things.  Unless  so  induced,  the  other  is  in  no  worse  po- 
sition than  if  no  reward  had  been  offered.  The  acting  upon  this  in- 
ducement is  what  supplies,  at  once,  the  mutual  assent  and  the  contem- 
plated consideration.  Without  the  legal  obligation  thus  arising  from 
contract  there  is  nothing  which  the  law  enforces. 

Reasons  have  also  been  put  forward  of  a  supposed  public  policy, 
assuming  that  persons  will  be  stimulated  by  the  enforcement  of  offers 
of  rewards  in  such  cases  to  aid  in  the  detection  of  crime  and  the  ar- 
rest and  punishment  of  criminals.  But,  aside  from  the  fact  that  the 
principles  of  law  to  be  laid  down  cannot  on  any  sound  system  of  rea- 
soning be  restricted  to  oft'ers  m.ade  for  such  purposes,  it  is  difficult  tc 
see  how  the  activities  of  people  can  be  excited  by  offers  of  rewards 
of  which  they  know  nothing.  If  this  reason  had  foundation  in  fact, 
it  would  hardly  justify  the  courts  in  requiring  private  citizens  to  min- 
ister to  the  supposed  public  policy  by  paying  rewards  merely  b^^ause 
they  have  made  oft'ers  to  pay  upon  which  no  one  has  acted/! 'Courts 
can  only  enforce  liabilities  which  have  in  some  way  been  fixed  by  the 
law.  While  we  have  been  seen  no  such  distinction  suggested,  it  may 
well  be  supposed  that  a  person  might  become  legally  entitled  to  a  re- 
ward for  arresting  a  criminal,  although  he  knew  nothing  of  its  hav- 
ing been  offered,  where  it  is  or  was  offered  in  accordance  with  law 
by  the  government.  A  legal  right  might  in  such  a  case  be  given  by 
law  without  the  aid  of  contract.  But  the  liability  of  the  individual  citi- 
zen must  arise  from  a  contract  binding  him  to  pay. 

The  question  is  answered  in  the  affirmative.    J^, 


OFFEE  AS  EEFEERINQ  TO  LEGAL  RELATIONS         31 


VIII.  Offer  as  Referring  to  Legal  Relations^* 


CHEROKEE  TANNING  EXTRACT  CO.  v.  WESTERN  UNION 

TELEGRAPH  CO. 

(Supreme  Court  of  North  Carolina,  1906.     143  N.  C.  376,  55  S.  E.  777, 
lis  Am.    St.   Rep.    806.) 

Action  by  the  Cherokee  Tanning  Extract  Company  against  the 
Western  Union  Telegraph  Company. 

This  is  an  appeal  from  a  judgment  in  favor  of  the  plaintiff,  for 
damages  alleged  to  have  been  sustained  through  the  negligence  of  the 
defendant  in  failing  to  transmit  and  deliver  promptly  a  certain  tel- 
egram. 

Brown,  J.  There  is  no  dispute  as  to  the  material  facts.  The  evi- 
dence shows : 

That  on  the  7th  day  of  November,  1903,  an  agent  of  the  Standard 
Oil  Company  at  Wilmington,  N.  C,  wrote  to  the  plaintiff  at  Andrews, 
N.  C,  a  letter  containing  among  other  things,  this  request :  "Kindly 
advise  us  by  wire  Monday  if  you  can  use  about  1,500  creosote  barrels 
between  now  and  January  1st  at  95  cents  each  delivered  in  car  load 
lots."  That  the  plaintiff  received  this  letter  on  Monday,  November 
9th,  and  at  7  :30  p.  m.  of  that  day  and  filed  with  the  defendant,  at  its 
Andrews  office,  a  message  addressed  to  the  Standard  Oil  Company, 
Wilmington,  N.  C,  and  reading  as  follows :  "We  accept  your  offer 
1.500  barrels  as  per  yours  of  the  7th."  This  message  was  delivered 
to  the  sendee  at  10:36  a.  m.,  November  10th.  At  the  same  time  it 
wrote  to  plaintiff,  the  oil  company  addressed  a  similar  letter  to  the 
Brevard  Tanning  Company  and  others.  The  latter  company  pur- 
chased the  barrels  by  telegram  received  by  the  oil  company  shortly 
before  plaintiff's  message. 

The  plaintiff  claims  substantial  damage.  Defendant  requested  the 
court  to  charge  that  plaintiff  was  entitled  to  recover  nominal  damages 
only,  to  wit,  the  price  paid  for  the  telegram.  We  think  this  instruc- 
tion should  have  been  given. 

Damages  are  measured  in  matters  of  contract  not  only  by  the  well- 
known  rule  laid  down  in  Hadley  v.  Baxendale,  9  Ench.  341,  but  they 
must  not  be  the  remote,  but  the  proximate,  consequence  of  a  breach 
of  contract,  and  must  not  be  speculative  or  contingent.  Unless  the 
reply  of  plaintiff  by  wire  to  the  letter  of  the  oil  company  created  a 
contract  between  the  two  for  the  sale  and  delivery  of  1,500  barrels 
at  95  cents  each,  then  plaintiff  can  recover  only  nominal  damages  for 
any  other  damages  would  necessarily  be  purely   speculative   or  con- 

11  For  discussion  of  priiiiiiilcs,  .suf  (,'liirk   on  Contriuts   iLM   \a].)  §  2U. 


32  OFFER    AND    ACCEPTANCE 

tingent.  The  language  of  Brannon,  J.,  in  a  similar  case  in  West  Vir- 
ginia is  appropriate  to  this:  "But  the  trouble  facing  the  plaintiff  in 
this  case  is  that  there  was  no  final  contract  between  the  parties,  but 
only  a  proposal  for  a  contract,  and  there  can  be  no  contract  without 
both  a  proposal  and  its  acceptance.  The  failure  of  the  telegram  com- 
pany did  not  cause  the  breach  of  a  consummate  contract ;  it  only  pre- 
vented one  that  might  or  might  not  have  been  made."  Beatty  v.  Tel. 
Co  52  W.  Va.  410,  44  S.  E.  309.  See,  also,  Hosiery  Co.  v.  Tel.  Co., 
123  Ga.  216,  51  S.  E.  290,  and  Wilson  v.  Tel.  Co.,  124  Ga.  131,  52 
S.  E.  153.  The  offer  must  be  distinct  as  such,  and  not  merely  an  in- 
vitation to  enter  into  negotiations  upon  a  certain  basis.  Wire  Works 
V.  Sorrell,  142  Mass.  442,  8  N.  E.  332;  Beaupre  v.  Tel.  Co.,  21  Minn. 
155 ;  24  Am.  &  Eng.  Enc.  1029,  and  cases  cited. 

Again,  the  offer  must  specify  the  specific  quantity  to  be  furnished, 
as  a  mere  acceptance  of  an  indefinite  offer  will  not  create  a  binding 
contract.  McCaw  Mfg.  Co.  v.  Felder,  115  Ga.  408,  41  S.  E.  664;  24 
Am.  &  Eng.  Enc.  1030,  note  1,  and  cases  cited.  "The  offer  must  be 
one  which  is  intended  of  itself  to  create  legal  relations  or  acceptance. 
It  must  not  be  an  offer  merely  to  open  negotiations  which  will  ulti- 
mately result  in  a  contract."  1  Paige  on  Cont.  §  26,  and  cases  cited ; 
Clark  on  Contracts,  §  29. 

In  Moulton  v.  Kershaw,  59  Wis.  316,  18  N.  W.  172,  48  Am.  Rep. 
516,  the  defendants  wrote  to  the  plaintiff  as  follows:  "In  consequence 
of  a  rupture  in  the  salt  trade,  we  are  authorized  to  offer  Michigan  fine 
salt  in  full  car  load  lots  of  80  to  75  barrels,  delivered  at  your  city  at 
85  cents  per  barrel  to  be  shipped  per  C.  &  N.  W.  R.  R.  Co.  only.  At 
this  price  it  is  a  bargain  as  the  price  in  general  remains  unchanged. 
Shall  be  pleased  to  receive  your  order."  The  plaintiff  at  once  tele- 
graphed the  defendant :  "Your  letter  of  yesterday  received  and  noted. 
You  may  ship  me  two  thousand  barrels  Michigan  fine  salt  as  offered 
in  your  letter."  The  defendant  declined  to  deliver  the  salt  and  plain- 
tiff sued  for  damages.  The  Supreme  Court  of  Wisconsin,  sustaining 
a  demurrer  to  the  complaint,  held  that  the  communications  between 
the  parties  did  not  show  a  contract ;  that  the  letter  of  the  defendants 
was  not  such  an  offer  as  plaintiff  could  by  an  acceptance  change  into 
a  binding  agreement.  See,  also.  Smith  v.  Gowdy,  8  Allen  (Mass.) 
566. 

The  letter  from  the  oil  company  to  the  plaintiff  was  a  mere  in- 
quiry. Walser  v.  Tel.  Co.,  114  N.  C.  440,  19  S.  E.  366.  It  was  ev- 
idently a  "trade  inquiry"  sent  out  by  the  oil  company  to  customers, 
and  did  not  purport  and  was  not  intended  to  be  a  legal  offer  binding 
on  acceptance.  "Care  should  be  taken  always  not  to  construe  as  an 
agreement  letters  which  the  parties  intended  only  as  preliminary  ne- 
gotiations."    Lyman  v.  Robinson,  14  Allen  (Mass.)  254. 

Again,  the  acceptance  by  the  plaintiff  was  not  in  the  terms  of  the 
offer.  The  acceptance  was  for  1,500  barrels.  The  oil  company  could 
not  have  compelled  the  plaintiff  to  take  a  less  number.     If  the  plain- 


OFFER  AS  REFERRING  TO  LEGAL  RELATIONS         33 

tiff  regarded  the  oil  company's  letter  as  a  valid  offer,  it  should  have 
replied  that  it  would  take  what  barrels  the  oil  company  had,  not  ex- 
ceeding 1,500,  as  that  company  had  offered  no  exact  specific  number. 
"An  acceptance  to  bind  the  other  party  must  be  unconditional  and 
unqualified  and  must  correspond  exactly  to  the  terms  of  the  offer." 
24  Am.  &  Eng.  Enc.  1031,  1032,  and  cases  cited;  1  Parsons,  Cont. 
476,  477. 

As  the  plaintiff's  message  to  the  oil  company  seasonably  delivered 
would  not,  of  itself,  have  effected  a  legal  contract  between  the  plain- 
tiff and  the  oil  company  for  the  delivery  of  1,500  barrels  at  95  cents 
each,  it  follows  that  any  other  than  nominal  damage  would  be  purely 
speculative.  The  oil  company  might  have  delivered  the  barrels,  and 
then,  again,  it  might  not  have  done  so.  It  might  have  delivered  1,500, 
and  again  it  might  have  delivered  a  much  less  number.  Its  letter 
specified  no  exact  number  and  it  was  under  no  legal  compulsion  to  de- 
liver any. 

As  the  defendant  manifests  its  willingness  to  pay  nominal  damages, 
it  is  unnecessary  to  consider  the  exceptions  to  his  honor's  rulings  on 
the  issue  of  negligence. 

We  award  a  new  trial  upon  the  second  issue  relating  to  the  dam- 
ages.   Partial  new  trial. 
Thbockm.Oont. — 3 


34  CLASSIPICATION 


CLASSIFICATION  OF  CONTRACTS— CONTRACTS  UNDER 
SEAL  AND  CONTRACTS  OF  RECORD 

L  Classification  of  Contracts* 


RANN  et  al.  v.  HUGHES. 

(House  of  Lords,  1778.    7  Term  R.  350,  note,  4  Br.  P.  C.  27,  2  Eng.  Repr.  18. 
53  Rev.  Rep.  262,  6  Eng.  R.  C.  1.) 

'  The  declaration  stated  that  on  the  11th  of  June,  1764,  divers  dis- 
putes had  arisen  between  the  plaintiffs'  testator  and  the  defendant's 
intestate,  which  they  referred  to  arbitration;  that  the  arbitrator 
awarded  that  the  defendant's  intestate  should  pay  to  the  plaintiffs' 
testator  i983.  That  the  defendant's  intestate  afterwards  died  pos- 
sessed of  efifects  sufficient  to  pay  that  sum;  that  administration  was 
granted  to  the  defendant;  that  Mary  Hughes  died,  having  appointed 
the  plaintiffs  her  executors;  that  at  the  time  of  her  death  the  said 
sum  of  £9S3  was  unpaid,  "by  reason  of  which  premises  the  defendant 
as  administratrix  became  liable  to  pay  to  the  plaintiffs  as  executors  the 
said  sum,  and  being  so  liable  she  in  consideration  thereof  undertook 
and  promised  to  pay  &c.q  The  defendant  pleaded  non  assumpsit; 
plene  administravit;  and  "plene  administravit,  except  as  to  certain 
goods  &c.  which  were  not  sufficient  to  pay  an  outstanding  bond  debt 
of  the  intestate's  therein  set  forth  &c.  'o  The  replication  took  issue  on 
all  these  pleas.  Verdict  for  the  plaintiff  on  the  first  issue,  and  for 
the  defendant  on  the  two  last;  and  on  the  first  a  general  judgment 
was  entered  in  B.  R.  against  the  defendant  de  bonis  propriis, 
7  This  judgment  was  reversed  in  the  exchequer-chamber;  and  a  writ 
of  error  was  afterwards  brought  in  the  house  of  lords,  where  after 
argument  the  following  question  was  proposed  to  the  judges  by  the 
lord  chancellor,  "Whether  sufficient  matter  appeared  upon  the  dec- 
laration to  warrant  after  verdict  the  judgment  against  the  defendant 
in  error  in  her  personal  capacity ;"  upon  which  the  Lord  Chief  Baron 
Skynner  delivered  the  opinion  of  the  judges  to  this  effect :  >  It  is  Un- 
doubtedly true  that  every  man  is  by  the  law  of  nature  bound  to  fulfil 
his  engagements.  It  is  equally  true  that  the  law  of  this  country  sup- 
plies no  means,  nor  aft'ords  any  remedy,  to  compel  the  performance 
of  an  agreement  made  without  sufficient  consideration;  such  agree- 
ment is  nudum  pactum  ex  quo  non  oritur  actio,  and  whatsoever  may 
be  the  sense  of  this  maxim  in  the  civil  law,  it  is  in  the  last-mentioned 
sense  only  that  it  is  to  be  understood  in  our  law.     The  declaration 

1  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §  27. 


CLASSIFICATION   OF  CONTRACTS  35 

states  that  the  defendant  being  indebted  as  administratrix  promised  to 
pay  when  requeste"d^  and  the  judgment  is  against  the  defendant  gen- 
erally. c^The  being  indebted  is  of  itself  a  sufficient  consideration  to 
ground  a  promise,  but  the  promise  must  be  coextensive  with  the  con- 
sideration unless  some  particular  consideration  of  fact  can  be  found  - 
here  to  warrant  the  extension  of  it  against  the  defendant  in  her  own  ca- 
pacity. If  a  person  indebted  in  one  right  in  consideration  of  forbeaf- 
ance  for  a  particular  time  promise  to  pay  in  another  right,  this  conven- 
ience will  be  a  sufficient  consideration  to  warrant  an  action  against  him 
or  her  in  the  latter  right :  but  here  no  sufficient  coiisideration  occurs  to 
support  this  demand  against  her  in  her  personal  capacity ;  for  she  de- 
rives no  advantage  or  convenience  from  the  promise  here  made.  For 
if  I  promise  generally  to  pay  upon  request  what  I  was  liable  to  pay  upon 
request  in  another  right,  I  derive  no  advantage  or  convenience  from  this 
promise,  and  therefore  there  is  not  sufficient  consideration  for  it.  But 
it  is  said  that  if  this  promise  is  in  writing  that  takes  away  the  necessity 
of  a  consideration  and  obviates  the  objection  of  nudum  pactum,  for 
that  cannot  be  where  the  promise  is  put  in  writing;  and  that  after 
verdict,  if  it  were  necessary  to  support  the  promise  that  it  should 
be  in  writing,  it  will  after  verdict  be  presumed  that  it  was  in  writing : 
and  this  last  is  certainly  true ;  but  that  there  cannot  be  nudum  pactum 
in  writing,  whatever  may  be  the  rule  of  the  civil  law,  there  is  certainly 
none  such  in  the  law  of  England.  His  lordship  observed  upon  the 
doctrine  of  nudum  pactum  delivered  by  Mr.  J.  Wilmot  in  the  case  of 
Pillans  V.  Van  Mierop  and  Hopkins,  3  Burrows,  1663,  that  he  con- 
tradicted himself,  and  was  also  contradicted  by  Vinnius  in  his  Com- 
ment on  Justinian. 

All  contracts  are  by  the  laws  of  England  distinguished  into  agree- 
ments by_  specialty,  and  agreements  by  parol;  nor  is  there  any  such 
third  class  as  some  of  the  counsel  have  endeavoured  to  maintain,  as 
contracts  in  writing.  If  they  be  merely  written  and  not  "specialties, 
they  are  parol,  and  a  consideration  must  be  proved.  But  it  is  said  that 
the  statute  of  frauds  has  taken  away  the  necessity  of  any  consideration 
in  this  case ;  the  statute  of  frauds  was  made  for  the  relief  of  personal 
representatives  and  others,  and  did  not  intend  to  charge  them  further 
than  by  common  law  they  were  chargeable.  His  lordship  here  read 
those  sections  of  that  statute  which  relate  to  the  present  subject.  He 
observed  that  the  words  were  merely  negative,  and  that  executors  and 
administrators  should  not  be  liable  out  of  their  own  estates,  unless  the 
agreement  upon  which  the  action  was  brought  or  some  memorandum  | 
thereof  was  in  writing  and  signed  by  the  i)arty.  But  this  docs  not 
prove  that  the  agreement  was  still  not  liable  to  be  tried  and  judged 
of  as  all  other  agreements  merely  in  writing  are  by  the  common  law, 
and  does  not  prove  the  converse  of  the  proposition  that  when  in  writ- 
ing the  party  must  be  at  all  events  liable.  He  here  observed  upon  the 
case  of  Pillans  v.  Van  Mierop  in  Burrows,  and  the  case  of  Lo.sh  v. 
Williamson,  Mich.  16  Geo.  HI.  in  B.  R. ;    and  so  far  as  ihr^c  cases 


36  CLASSIFICATION 

went  on  the  doctrine  of  nudum  pactum,  he  seemed  to  intimate  that 
they  were  erroneous^]  He  said  that  all  his  Brothers  concurred  with 
him  that  in  this  case  there  was  not  a  sufficient  consideration  to  sup- 
port this  demand  as  a  personal  demand  against  the  defendant,  and 
that  its  being  now  supposed  to  have  been  in  writing  makes  no  differ- 
ence. The  consequence  of  which  is  that  the  question  put  to  us  must  be 
answered  in  the  negative. 

And  the  judgment  in  the  exchequer-chamber  was  affirmed. 


II.  Contracts  of  Record' 


O'BRIEN  V.  YOUNG. 
(Court  of  Appeals  of  New  York,  1884.    95  N.  Y.  428,  47  Am.  Rep.  64.) 

Appeal  from  an  order  of  the  General  Term  of  the  Supreme  Court, 
first  department,  made  January  8,  1884,  affirming  an  order  of  the 
Special  Term  made  November  23,  1883,  which  denied  a  motion  by 
defendants  to  restrain  plaintiff,  the  sheriff  of  New  York  county,  from 
collecting  interest  upon  a  judgment  in  favor  of  plaintiff  and  against 
the  defendants  at  a  rate  greater  than  6  per  cent,  from  and  after  Jan- 
uary 1,  1880. 

The  judgment  in  question  was  recovered  February  10,  1877,  and 
on  November  19,  1883,  an  execution  thereon  was  issued  to  the  sher- 
iff of  New  York  county,  directing  him  to  collect  the  amount  of  the 
judgment,  $2,994.64,  with  interest  at  7  per  cent,  from  February  10, 
1877. 

Earl,  J.'  By  the  decided  weight  of  authority  in  this  state,  where 
one  contracts  to  pay  a  principal  sum  at  a  certain  future  time  with  in- 
terest, the  interest  prior  to  the  maturity  of  the  contract  is  payable  by 
virtue  of  the  contract,  and  thereafter  as  damages  for  the  breach  of 
the  contract.  Macomber  v.  Dunham,  8  Wend.  550;  United  States 
Bank  v.  Chapin,  9  Wend.  471 ;  Hamilton  v.  Van  Rensselaer,  43  N. 
Y.  244 ;  Ritter  v.  Phillips,  53  N.  Y.  586 ;  Railroad  Co.  v.  Moravia, 
61  Barb.  180.  And  such  is  the  rule  as  laid  down  by  the  federal  su- 
preme court.  Brewster  v.  Wakefield,  22  How.  118,  16  L.  Ed.  301  ; 
Bernhisel  v.  Firman,  22  Wall.  170,  22  L.  Ed.  766;  Holden  v.  Trust 
Co.,  100  U.  S.  72,  25  L.  Ed.  567.  The  same  authorities  show  that 
after  the  maturity  of  such  a  contract,  the  interest  is  to  be  computed  as 
damages  according  to  the  rate  prescribed  by  the  law,  andl  not  according 
to  that  prescribed  in  the  contract  if  that  be  more  or  less. 

2  For  discussion  of  principles,  see  Clarli  on  Contracts  (2d  Ed.)  §  28. 

3  The  statement  of  facts  is  abridged  and  the  concurring  opinion  of  An- 
drews, J.,  and  the  dissenting  opinion  of  Dauforth,  J.,  are  omitted. 


CONTRACTS   OF  RECORD  37 

But  when  the  contract  provides  that  the  interest  shall  be  at  a  speci- 
fied rate  until  the  principal  shall  be  paid,  then  the  contract  rate  governs 
until  payment  of  the  principal,  or  until  the  contract  is  merged  in  a 
judgment.  And  where  one  contracts  to  pay  money  on  demand  "with 
interest,"  or  to  pay  money  generally  "with  interest,"  without  specify- 
ing time  of  payment,  the  statutory  rate  then  existing  becomes  the  con- 
tract rate  and  must  govern  until  payment,  or  at  least  until  demand  and 
actual  default,  as  the  parties  must  have  so  intended.  Paine  v.  Caswell, 
68  Me.  80,  28  Am.  Rep.  21 ;  Eaton  v.  Boissonnault,  67  Me.  540,  24  Am. 
Rep.  52. 

If,  therefore,  this  judgment,  the  amount  of  which  is  by  its  terms 
payable  with  interest,  is  to  be  treated  as  a  contract — as  a  bond  executed 
by  the  defendants  at  its  date,  then  the  statutory  rate  of  interest  exist- 
ing at  the  date  of  the  rendition  of  the  judgment  is  to  be  treated  as  pan 
of  the  contract  and  must  be  paid  by  the  defendants  according,  to  the 
terms  of  the  contract,  and  thus  the  plaintiff's  contention  is  well 
founded. 

But  is  a  judgment,  properly  speaking,  for  the  purposes  now  in  hand, 
a  contract  ?  I  think  not.  The  most  important  elements  ot  a  contract 
are  wanting.  There  is  no  aggregatio  mentium.  The  defendant  lias 
not  voluntarily  assented  All  the  authorities  assert  that  the  existence 
of  parties  legally  capable  of  contracting  is  essential  to  every  contract, 
and  yet  they  nearly  all  agree  that  judgments  entered  against  lunatics 
and  others  incapable  in  law  of  contracting  are  conclusively  binding 
until  vacated  or  reversed.  In  Wyman  v.  Mitchell,  1  Cow.  316,  Suther- 
land, J.,  said  that  "a  judgment  is  in  no  sense  a  contract  or  agreement 
between  the  parties."  In  McCoun  v.  Railroad  Co.,  50  N.  Y.  176,  Al- 
len, J.,  said  that  "a.  statute  liability  wants  all  the  elements  of  a  con- 
tract, consideration  and  mutuality  as  well  as  the  assent  of  the  party. 
Even  a  judgment  founded  upon  contract  is  no  contract." 

In  Bidleson  v.  Whytel,  3  Burrows,  1545-1548,  it  was  held  after 
great  deliberation  and  after  consultation  with  all  the  judges,  Lord 
Mansfield  speaking  for  the  court,  "that  a  judgment  is  no  contract,  nor 
can  be  considered  in  the  light  of  a  contract,  for  judicium  redditur  in 
invitum."  To  the  same  effect  are  the  following  authorities :  Rae  v. 
Hulbert,  17  111.  572;  Todd  v.  Crumb,  5  McLean,  172,  Fed.  Cas.  No. 
14,073 ;  Smith  v.  Harrison,  33  Ala.  706 ;  Masterson  v.  Gibson,  56  Ala. 
56;  Keith  v.  Estill,  9  Port.  (Ala.)  669;  Larrabee  v.  Baldwin,  35  Cal. 
156;  In  re  Kennedy,  2  S.  C.  226;  State  v.  Mayor,  etc.,  of  New  Or- 
leans, r09  U.  S.  285,  3  Sup.  Ct.  211,  27  L.  Ed.  936. 

But  in  some  decided  cases,  and  in  text-books,  judges  and  jurists  have 
frequently,  and,  as  I  think,  without  strict  accuracy,  spoken  of  judg- 
ments as  contracts.  They  have  been  classified  as  contracts  with  refer- 
ence to  the  remedies  upon  them.  In  the  division  of  actions  into  ac- 
tions ex  contractu  and  ex  delicto,  actions  upon  judgments  have  been 
assigned  to  the  former  class.  It  has  been  said  that  the  law  of  con- 
tracts, in  its  widest  extent,  may  be  regarded  as  including  nearly  all  the 


1.31  HS5 


38  CLASSIFICATION 

law  which  regulates  the  relations  of  human  life;  that  contract  is  co- 
ordinate and  commensurate  with  duty ;  that  whatever  it  is  the  duty  of 
one  to  do  he  may  be  deemed  in  law  to  have  contracted  to  do,  and  that 
the  law  presumes  that  every  man  undertakes  to  perform  what  reason 
and  justice  dictate  he  should  perform.  1  Pars.  Cont.  (6th  Ed.)  3;  2 
Bl.  Comm.  543;  3  Bl.  Comm.  160;   McCoun  v.  Railroad  Co.,  supra. 

Contracts  in  this  wide  sense  are  said  to  spring  from  the  relations  of 
men  to  each  other  and  to  the  society  of  which  they  are  members. 
Blackstone  says :  "It  is  a  part  of  the  original  contract  entered  into  by 
all  mankind  who  partake  the  benefits  of  society,  to  submit  in  all  points 
to  the  municipal  constitutions  and  local  ordinances  of  that  state  of 
which  each  individual  is  a  member."  In  the  wide  sense  thus  spoken 
of  the  contracts  are  mere  fictions  invented  mainly  for  the  purpose  of 
giving  and  regulating  remedies.  A  man  ought  to  pay  for  services 
which  he  accepts,  and  hence  the  law  implies  a  promise  that  he  will 
pay  for  them.  A  man  ought  to  support  his  helpless  children,  and  hence 
the  law  implies  a  promise  that  he  will  do  so.  So  one  ought  to  pay  a 
judgment  rendered  against  him,  or  a  penalty  which  he  has  by  his  mis- 
conduct incurred,  and  hence  the  law  implies  a  promise  that  he  will 
pay.  There  is  no  more  contract  to  pay  the  judgment  than  there  is  to 
pay  the  penalty.  He  has  neither  promised  to  pay  the  one  nor  the  other, 
The  promise  is  a  mere  fiction,  and  is  implied  merely  for  the  purpose 
of  4;he  remedy.  Judgments  and  penalties  are,  in  the  books,  in  some 
respects,  placed  upon  the  same  footing.  At  common  law  both  could 
be  sued  for  in  an  action  ex  contractu  for  debt,  the  action  being  based 
upon  the  implied  promise  to  pay.  But  no  one  will  contend  that  a  pen- 
alty is  a  contract,  or  that  one  is  really  under  a  contract  liability  to 
pay  it.    McCoun  v.  N.  Y.  C.  &  H.  R.  R.  R.  Co.,  supra. 

Suppose  a  statute  gives  a  penalty  to  an  aggrieved  party,  with  inter- 
est, what  interest  could  he  recover?  The  interest  allowed  by  law  when 
the  penalty  accrued,  if  the  statute  rate  has  since  been  altered?  Clear- 
ly not.  He  would  be  entitled  to  the  interest  prescribed  by  law  during 
the  time  of  the  defendant's  default  in  payment.  There  would,  in  such 
a  case,  be  no  contract  to  pay  interest,  and  the  statutory  rate  of  interest 
at  the  time  the  penalty  accrued  would  become  part  of  no  contract. 
If,  therefore,  a  subsequent  law  should  change  the  rate  of  interest,  no 
vested  right  would  be  interfered  with,  and  no  contract  obligation  would 
be  impaired. 

The  same  principles  apply  to  all  implied  ^  contracts.  When  one 
makes  a  valid  agreement  to  pay  interest  at  any  stipulated  rate  for 
any  time,  he  is  bound  to  pay  it,  and  no  legislative  enactment  can  re- 
lease him  from  his  obligation.  But  in  all  cases  where  the  obligation 
to  pay  interest  is  one  merely  implied  by  the  law  or  is  imposed  by  law, 
and  there  is  no  contract  to  pay  except  the  fictitious  one  which  the  law 
implies,  then  the  rate  of  interest  must  at  all  times  be  the  statutory 
rate.  The  rate  existing  at  the  time  the  obligation  accrued  did  not  be- 
come part  of  any  contract,  and  hence  the  law  which  created  the  obliga- 


CONTEACTS    OF   RECORD  39 

tion  could  change  or  alter  it  for  the  future  without  taking  away  a 
vested  right  or  impairing  a  contract. 

In  the  case  of  all  matured  contracts  which  contain  no  provision  for 
interest  after  they  are  past  due,  as  I  have  before  said,  interest  is 
allowed,  not  by  virtue  of  the  contract,  but  as  damages  for  the  breach 
thereof.  In  such  cases  what  would  be  the  effect  of  a  statute  declaring 
that  no  interest  should  be  recovered?  As  to  the  interest  which  had  ac- 
crued as  damages  before  the  date  of  the  law,  the  law  could  have  no 
effect  because  that  had  become  a  vested  right  of  property  which  could 
not  be  taken  away.  But  the  law  could  have  effect  as  to  the  subse- 
quent interest,  and  in  stopping  that  from  running  would  impair  no  con- 
tract. A  law  could  be  passed  providing  that  in  all  cases  of  unliquidat- 
ed claims  which  now  draw  no  interest,  interest  should  thereafter  be 
allowed  as  damages ;  and  thus  there  is  ample  legislative  power  in 
such  cases  to  regulate  the  future  rate  of  interest  without  invading  any 
constitutional  right.  When  a  man's  obligation  to  pay  interest  is  simply 
that  which  the  law  implies,  he  discharges  that  obligation  by  paying  what 
the  law  exacts. 

This  judgment,  so  far  as  pertains  to  the  question  we  are  now  con- 
sidering, can  have  no  other  or  greater  force  than  if  a  valid  statute  had 
been  enacted  requiring  the  defendant  to  pay  the  same  sum  with  in- 
terest. Under  such  a  statute,  interest  would  be  computed,  not  at  the 
rate  in  force  when  the  statute  was  enacted,  but  according  to  the  rate 
in  force  during  the  time  of  default  in  payment.  A  different  rule 
would  apply  if  a  judgment  or  statute  should  require  the  payment  of 
a  given  sum  with  interest  at  a  specified  rate.  Then  interest  at  the  rate 
specified  would  form  part  of  the  obligation  to  be  discharged. 

Here,  then,  the  defendant  did  not  in  fact  contract  or  promise  to  pay 
this  judgment,  or  the  interest  thereon.  The  law  made  it  his  duty  to 
pay  the  interest,  and  implied  a  promise  that  he  would  pay  it.  That 
duty  is  discharged  by  paying  such  interest  as  the  law,  during  the  time 
of  default  in  paying  the  principal  sum,  prescribed  as  the  legal  rate. 

If  this  judgment  had  been  rendered  at  the  date  the  execution  was 
issued,  interest  would  have  been  computed  upon  the  original  demand 
at  seven  per  cent,  to  January  1,  1880,  and  then  at  the  rate  of  6  per  cent. 
Shall  the  plaintiff  have  a  better  position  because  the  judgment  was 
rendered  prior  to  1880? 

As  no  intention  can  be  imputed  to  the  parties  in  reference  to  the 
clause  in  the  judgment  requiring  payment  "with  interest"  we  may  in- 
quire what  intention  the  court  had.  It  is  plain  that  it  could  have  had 
no  other  intention  than  that  the  judgment  should  draw  the  statutory 
interest  until  payment.  It  cannot  be  presumed  that  the  court  intended 
that  the  interest  should  be  at  the  rate  of  7  per  cent,  if  the  statutory 
rate  should  become  less. 

That  there  is  no  contract  obligation  to  pay  the  interest  upon  judg- 
ments which  is  beyond  legislative  interference  is  shown  by  legislation 
in  this  country  and  in  England.     Laws  have  been  passed  providing 


40  CLASSIFICATION 

that  all  judgments  should  draw  interest,  and  changing  the  rate  of  in- 
terest upon  judgments,  and  such  laws  have  been  applied  to  judgments 
existing  at  their  date,  and  yet  it  was  never  supposed  that  such  laws 
impaired  the  obligation  of  contracts. 

It  is  claimed  that  the  provision  in  section  1  of  the  act  of  1879, 
which  reduced  the  rate  of  interest  (chapter  538),  saves  this  judgment 
from  the  operation  of  that  act.  The  provision  is  that  "nothing  herem 
contained  shall  be  so  construed  as  to  in  any  way  affect  any  contract 
or  obligation  made  before  the  passage  of , this  act."  The  answer  to  this 
claim  is  that  here  there  was  no  contract  to  pay  interest  at  any  given 
rate.  The  implied  contract,  as  I  have  shown,  was  to  pay  such  inter- 
est as  the  law  prescribed,  and  that  contract  is  not  affected  or  interfered 

with. 

The  foregoing  was  written  as  my  opinion  in  the  case  of  Prouty  v. 
Railway  Co.,  95  N.  Y.  667.  The  only  difference  between  that  case  and 
this  is  that  there  the  judgment  was  by  its  terms  payable  "with  interest." 
Here  the  judgment  contains  no  direction  as  to  interest.  The  reason- 
ing of  the  opinion  is  applicable  to  this  case  and  is,  therefore,  read  to 
justify  my  vote  in  this.  Since  writing  the  opinion,  we  have  decided 
in  the  case  of  Sanders  v.  Railway  Co.,  94  N.  Y.  641,  the  law  to  be  as 
laid  down  in  the  first  paragraph  of  the  opinion. 

The  orders  of  the  general  and  special  terms  should  be  reversed  and 
the  motion  granted,  without  costs  in  either  court,  the  parties  having 
so  stipulated. 


III.  Contracts  Under  Seal* 
1.  How  Contracts  Under  Seal  ars,  Made 


Appeal  of   HACKER. 

(Supreme  Ck)urt  of  Pennsylvania,  1888.     121  Pa.  192,  15  Atl.  500, 
1  L.  R.  A.  861.) 

Appeal  from  orphans'  court,  Philadelphia  county. 

Decree  in  the  orphans'  court  relative  to  the  estate  of  Ellen  Wain, 
deceased,  construing  the  holographic  will  of  said  decedent  not  to  be  an 
exercise  of  a  power  of  appointment  under  the  will  of  Jacob  S.  Wain. 
William  Hacker,  executor  of  the  will  of  Ellen  Wain,  appeals. 

Clark,  J.  The  only  question  to  be  decided  in  this  case  is  whether 
or  not  Ellen  Wain  properly  exercised  the  power  of  appointment  given 
her  in  the  last  will  and  testament  of  her  father,  Jacob  S.  Wain,  de- 
ceased    The  testator,  Jacob  S.  Wain,  devised  and  bequeathed  all  of 

*For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  30-33. 


CONTRACTS   UNDEE   SEAL  41 

his  property,  real,  personal,  and  mixed),  to  certain  persons  named  in 
his  will,  upon  certain  trusts,  viz.:  To  pay  the  net  income  thereof  to 
his  wife,  Sarah  M.  Wain,  during  the  term  of  her  Hfe;  at  her  death  to 
apportion  the  trust-estate  into  as  many  shares  as  he  had  children,  and 
to  convey  to  his  sons,  Henry  and  Edward,  their  respective  shares  in 
fee ;  to  pay  to  each  of  his  daughters,  whether  covert  or  single,  the 
income  of  their  respective  shares  for  their  maintenance  and  support; 
or,  in  case  of  their  marriage  and  death,  to  their  surviving  husbands  or 
children,  respectively,  as  the  case  might  be ;  "and  to  convey  the  share 
of  any  unmarried  daughter,  or  of  a  daughter  dying  married  and  without 
children,  as  she  may  by  writing  under  her  hand  and)  seal,  in  nature  of 
a  last  will  and  testament,  executed  in  the  presence  of  two  witnesses, 
designate  and  appoint;  and,  in  default  of  such  appointment,  to  their 
or  her  brothers  or  sisters  living,  or,  if  dead  leaving  issue,  then 
to  the  said  issue,  share  and  share  alike."  Ellen  Wain,  one  of  the 
daughters  who  was  unmarried  and  without  issue,  made  and  published 
her  last  will  and  testament,  wherein  she  undertook  to  exercise  the  pow- 
er of  appointment  reposed  in  her  by  her  father's  will ;  referring  special- 
ly to  the  property  covered  by  the  trust,  and  over  which  she  was  in- 
vested with  the  power.  Her  will  is  in  due  form,  was  signed  by  her  in 
the  presence  of  two  witnesses,  was  after  her  death  duly  probated  and 
recorded,  and  it  is  conceded  to  be  a  perfectly  valid  disposition  of  her 
estate. 

It  is  contended,  however,  that  the  will  is  not  a  valid  exercise  of 
the  power,  because  it  is  not  in  compliance  with  the  donor's  directions, 
in  this :  that  it  is  not  a  writing  under  seal.  The  testimonium  clause 
of  the  will  is  in  these  words :  "In  witness  whereof  I  have  hereunto 
set  my  hand  and  seal ;"  and  to  this  is  appended  the  signature  in  the 
form  following:  "Ellen  Wain — ."  No  wafer  or  scroll  in  the  usual 
form  was  affixed  for  a  seal,  nor  was  there  any  flourish  of  the  pen 
in  lieu  thereof,  other  than  the  dash  " — "  following  the  name,  which 
was  perhaps  from  one-sixteenth  to  one-eighth  of  an  inch  in  length, 
and  was  made  by  the  pen,  apparently  in  connection  with  the  signature. 
The  estate  of  Ellen  Wain  was  for  life  only.  The  fee,  under  this  pe- 
culiar provision  of  her  father's  will,  was  vested  in  those  entitled  in  de- 
fault of  appointment,  subject  to  be  divested,  however,  on  a  proper  ex- 
ecution of  the  power.  It  may  be  conceded,  too,  that  it  was  essential 
that  the  exercise  of  the  power  should  be  in  strict  compliance  with  the 
directions  contained  in  the  will  of  Jacob  S.  Wain,  deceased.  He  was 
the  owner  of  the  entire  estate,  and  hadl  a  right  to  dispose  of  it  as  he 
pleased.  Therefore  any  terms  which  he  saw  fit  to  impose  must  be 
fulfilled,  or  the  execution  is  fatally  defective.  Rutland  v.  Wythe,  10 
Clark  &  F.  419. 

The  world  has  outgrown  the  necessities  of  an  age  when  men  made 
their  seals  because  they  could  not  write.  What  then  from  necessity 
attested  the  very  act  of  execution  and  the  genuineness  of  it  is  now 
but  a  mere  arbitrary  form,  tiirough  which,  however,  special  obligatif^is 


42  C5LASSIFICATI0N 

Still  attach,  in  support  of  the  well-recognized  distinction  between  writ- 
ings which  are  sealed  and  those  that  are  not.  "Although  in  this  and 
many  of  our  sister  states,"  says  Chief  Justice  Tilghman  in  Taylor  v. 
Glaser,  2  Serg.  &  R.  (Pa.)  502,  "the  law  has  been  somewhat  relaxed  in 
favor  of  custom  and  convenience  in  doing  business,  yet  this  relaxation 
is  confined  to  the  manner  of  making  a  seal.  Sealing  and  delivering  are 
still  the  criterion  of  a  specialty ;  and  it  is  important  that  the  distinction 
between  specialties  and  writings  should  be  preserved  in  the  courts, 
because  in  payment  of  debts  due  from  the,  estates  of  deceased  persons 
and  in  other  cases  the  law  makes  the  distinction.  If  it  should  be 
thought  that  in  the  present  state  of  society  it  would  be  best  to  put  all 
writings  on  the  same  footing,  the  legislature  alone  has  power  to  ac- 
complish it."  That  the  writing  should  be  "under  seal,"  it  may  be  con- 
ceded, was  in  this  instance  a  mere  technical  requirement,  which  could 
not  in  any  way  affect  the  substance  of  the  instrument,  or  add  to  or 
subtract  from  the  testator's  rights;  yet  it  was  competent  for  him,  as 
against  a  mere  volunteer  or  a  charity,  to  impose  any  lawful  restric- 
tion upon  the  execution  of  the  power  which  his  judgment  would  ap- 
prove or  his  fancy  suggest. 

Was  the  will  of  Ellen  Wain  under  seal?  This  is  the  question  upon 
which  the  determination  of  this  case  depends.  It  is  plain  that  in  the 
preparation  of  her  last  will  the  testatrix  intended  to  exercise  this  pow- 
er of  appointment,  and  to  exercise  it  in  the  way  designated  by  the 
donor.  She  made  particular  reference  to  the  property  over  which  she 
had  the  power,  and  in  proper  form  and  phrase  disposed  of  it,  designat- 
ing and  appointing  the  persons  to  receive  it.  She  subscribed  her  name 
with  the  mark  following,  in  the  presence  of  two  witnesses ;  and  in  the 
testimonium  clause  states,  in  terms,  that  she  has  affixed  her  hand  and 
seal.  Under  such  special  circumstances,  may  we  not  assume  that  the 
testatrix  intended  this  dash  of  the  pen  as  a  seal?  A  seal  is  not  nec- 
essarily of  any  particular  form  or  figure.  When  not  of  wax,  it  is  usu- 
ally made  in  the  form  of  a  scroll ;  but  the  letters  "L.  S."  or  the  word 
"Seal,"  inclosed  in  brackets  or  in  some  other  design,  is  in  frequent 
use.  It  may,  however,  consist  of  the  outline,  without  any  inclosure. 
It  may  have  a  dark  ground  or  a  light  one.  It  may  be  in  the  form 
of  a  circle,  an  ellipse,  or  a  scroll,  or  it  may  be  irregular  in  form.  It 
may  be  a  simple  dash  or  flourish  of  the  pen.  Long  v.  Ramsay,  1  Serg. 
&  R.  (Pa.)  72.  Its  precise  form  cannot  be  defined ;  that,  in  each  case, 
will  depend  wholly  upon  the  taste  or  fancy  of  the  person  who  makes 
it.  The  mere  fact  that  in  the  testimonium  clause  the  testatrix  states 
that  she  has  affixed  her  hand  and  seal  is  insufficient  to  constitute  the 
instrument  a  writing  under  seal  if,  in  fact,  there  be  no  seal ;  but  if 
there  be  any  mark  or  impression  which  might  reasonably  be  taken  for 
a  seal,  this  statement  of  the  testatrix  will  certainly  afford  the  strongest 
evidence  that  the  mark  was  so  intended. 

In  Taylor  v.  Glaser,  supra,  there  was  nothing  but  a  flourish  of  the 
pen  below  the  signature,  and  it  was  offered  to  be  shown  that  this  ac- 


CONTRACTS   UNDER  SEAL  43 

companied  Glaser's  ordinary  signature.  There  was  nothing  on  the 
face  of  the  paper  which,  in  the  opinion  of  the  court,  the  obligor  could 
have  intended  for  a  seal.  To  the  same  effect  is  the  case  of  Duncan 
V.  Duncan,  1  Watts  (Pa.)  322,  where  a  ribbon  had  been  inserted, 
manifestly  as  a  preliminary  to  the  act  of  sealing,  which  act  was  never 
performed.  Whether  the  instrument  is  under  seal  or  not  is  a  question 
to  be  determined  by  the  court  upon  inspection ;  and  whether  or  not 
any  mark  or  impression  shall  be  held  to  be  a  seal  depends  wholly  upon 
the  intention  of  the  party  executing  the  instrument  as  exhibited  on 
the  face  of  the  paper  itself.  The  dash  which  follows  the  signature  in 
this  case,  it  must  be  conceded,  is  not  in  the  usual  or  ordinary  form 
of  a  seal ;  but,  as  no  particular  form  is  prescribed  by  law,  we  think 
that  upon  a  consideration  of  the  plain  requirements  of  the  writing 
creating  the  power,  and  of  the  manifest  purpose  and  effort  of  the  tes- 
tatrix to  execute  that  power  in  the  manner  designated,  and  her  avowed 
purpose  to  affix  a  seal,  together  with  the  presence  of  a  mark  or  flourish 
of  the  pen  which  may  be  taken  as  such,  we  are  justified  in  assuming 
that  the  mark  was  made  and  intended  for  a  seal,  and  that  the  writing 
is  in  this  respect  in  compliance  with  the  donor's  directions.  It  is  said 
that  the  same  or  a  similar  mark  is  found  in  other  parts  of  the  will, 
used  for  punctuation,  and  that  this  is  a  circumstance  evidencing  a  dif- 
ferent intention  of  the  testatrix.  But  if  the  testatrix  did  use  a  mark  in 
this  form  indifferently  for  a  comma,  a  colon,  or  a  period,  what  good 
reason  is  there  for  supposing  she  did  not  also  use  it  for  a  seal? 

The  decree  of  the  orphans'  court  is  reversed,  and  the  record  re- 
mitted, in  order  that  a  decree  may  be  made  in  accordance  with  this 
opinion. 


2.  Characteristics  of  Contract  Under  Seal 


WATKINS  V.  ROBERTSON  et  al. 

(Supreme  Court  of  Appeals  of  Virginia,  1906.     105  Va.  2G9,  54  S.  E.  33, 
5  L.  R.  A.  [N.  S.]  1194,  115  Am.  St.  Rep.  880.) 

Appeal  from  Chancery  Court  of  Richmond. 

Suit  by  Charles  H.  Watkins  against  W.  S.  Robertson  and  others  for 
specific  performance  of  a  contract  for  sale  of  corporate  stock.  From 
a  decree  in  favor  of  defendants,  complainant  appeals. 

Cardwell,  J.°  This  litigation  grows  out  of  the  following  agree- 
ment : 

"Memorandum  of  agreement,  made  this  26th  day  of  October,  1904, 
by  and  between  W.  S.  Robertson,  of  the  first  part,  and  S.  S.  Elam, 
of  the  second  part. 

6  .\   portion  of  tlH>  opinion   Is  oinitt(?tL 


44  CLASSIFICATION 

"The  said  W.  S.  Robertson,  party  of  the  first  part,  in  consideration 
of  one  dollar  to  them  in  hand  paid  by  said  S.  S.  Elam,  party  of  the 
second  part,  at  and  before  the  execution  of  this  contract,  the  receipt  of 
which  is  hereby  acknowledged,  do  hereby  covenant,  contract  and  agree 
to  sell  to  the  said  S.  S.  Elam,  party  of  the  second  part,  or  his  assigns 
496  shares  of  the  capital  stock  of  the  Watkins-Cottrell  Company,  at 
and  for  the  price  of  $137.50  per  share,  and  to  deliver  the  same  to  said 
second  party  on  payment,  or  tender  by  said  second  party  to  said  first 
party  of  the  purchase  money  therefor  at  the  said  rate  of  $137.50  per . 
share ;  and  it  is  agreed  between  the  parties  hereto  that  the  said  party 
of  the  second  part  shall  have  the  right  to  make  the  said  tender  or 
payment  of  the  said  purchase  money  to  said  first  party  and  thereupon 
to  demand  the  delivery  of  the  said -capital  stock  until  December  1, 
1904. 

"Witness  our  hands  and  seals  the  day  and  year  first  above  written. 

"W.  S.  Robertson.     [Seal.] 
"S.  S.  Elam.  [Seal.]" 

On  the  21st  of  November,  1904,  Elam  in  writing  and  for  value  re- 
ceived assigned  the  above  "option  and  agreement"  to  Oliver  J.  Sands, 
or  his  assigns,  and  on  the  same  day  and  in  the  same  words  Sands 
made  a  similar  assignment  of  the  agreement  to  Charles  H.  Watkins, 
or  his  assigns. 

On  the  same  date  of  the  agreement,  Robertson  executed  and  deliv- 
ered to  Elam  the  following,  paper : 

"Oct.  26,  1904. 
"Mr.  S:  S.  Elam,  Richmond,  Va. 

"Dear  Sir:  Referring  to  the  option  given  you  to-day  on  my  496 
shares  of  stock  in  the  Watkins-Cottrell  Company,  at  $137.50  per 
share,  until  Dec.  1,  1904,  I  beg  to  advise  that  if  the  said  option  is 
exercised  by  you  or  your  assigns  I  will  allow  you  a  rebate  of  $3,180.- 
38  on  the  price  named  in  said  option. 

"Yours  very  truly,  W.  S.  Robertson." 

This  latter  agreement  was  by  Elam,  on  the  21st  of  November,  1904, 
for  value  received,  also  assigned  to  Oliver  J.  Sands,  or  his  assigns. 

The  plaintiff,  Charles  H.  Watkins,  filed  his  original  and  amended 
bills  in  this  cause  for  the  purpose  of  enforcing  the  specific  perform- 
ance of  the  contract  of  October  26,  1904,  for  the  sale  of  the  496 
shares  of  stock  referred  to  therein,  he  claiming  to  have  purchased  the 
stock  through  Oliver  J.  Sands,  on  November  21,  1904,  in  accordance 
with  the  terms  and  provisions  of  the  contract;  that  on  the  day  and 
year  last  mentioned  the  said  Sands  did  in  fact  purchase  said  option 
contract  from  Elam,  paying  him  therefor  the  sum  of  $3,180.38,  and 
took  an  assignment  thereof  from  him;  that  Sands,  acting  in  the 
matter  for  the  plaintiff,  approached  the  defendant,  W.  S.  Robertson, 
on  the  day  and  year  last  stated  and  notified  Robertson  that  he  (Sands) 
desired  to  exercise  said  option  contract  by  the  purchase  of  the  496 
shares  of  stock  at  the  price  named  in  the  contract,  to  wit:    $137.50 


CONTRACTS    UNDER   SEAL  45 

per  share,  and  then  and  there  offered  to  pay  Robertson  the  full  pur- 
chase price  thereof,  but  Robertson  refused  to  receive  the  same,  stating 
that  he  had  already  sold  the  stock  to  another  party;  that  upon  this 
refusal  of  Robertson,  Sands  assigned  said  option  contract  to  the 
plaintiff,  of  which  assignment  Robertson  was  at  once  notified;  and 
that  Robertson  was  also  then  notified  that  the  plaintiff  was  ready,  able 
and  willing  to  pay  for  the  stock  the  full  price  agreed  upon  in  the  op- 
tion contract,  and  warned  to  make  no  assignment  or  transfer  of  the 
stock  to  other  than  the  plaintiff.  An  injunction  was  prayed  for  and 
granted,  restraining  Robertson,  his  agents,  etc.,  from  selling,  assigning, 
or  delivering  the  said  shares  of  stock  of  the  Watkins-Cottrell  Compa- 
ny in  the  bill  mentioned,  or  any  part  thereof,  or  in  any  way  parting 
from  the  possession  of  the  stock,  or  the  certificates  representing  the 
same,  until  the  further  order  of  the  court.     *     *     * 

Upon  the  pleadings  in  the  cause,  the  exhibits  therewith  and  an  af- 
fidavit made  and  filed  by  Robertson,  the  lower  court,  by  its  decree, 
reciting  that  the  case  would  be  rendered  doubtful  by  the  conflicting 
evidence  of  the  parties,  and  by  the  consent  of  both  plaintiff  and  de- 
fendant, and  in  pursuance  of  the  statute  in  such  case  made  and  pro- 
vided, adjudged,  ordered,  and  decreed  that  an  issue  be  made  up  and 
tried  by  a  jury  at  the  bar  of  the  court  on  the  23d  day  of  February, 
1905,  to  ascertain  whether  the  alleged  purchase  of  the  496  shares  of 
the  capital  stock  of  the  Watkins-Cottrell  Company,  as  claimed  in  the 
bills  of  complaint  to  have  been  made  by  the  plaintiff,  Charles  H. 
Watkins,  was  and  is  valid  and  binding  upon  the  defendant,  W.  S. 
Robertson. 

Upon  the  trial  of  this  issue,  it  was  fqund  by  the  jury  that  the  al- 
leged purchase  of  the  496  shares  of  stock  in  question,  as  claimed  in 
the  bills  of  complaint  to  have  been  made  by  the  plaintiff  Watkins,  was 
not  binding  upon  the  defendant  Robertson.  Upon  the  coming  in  of 
this  verdict,  the  plaintiff  moved  the  court  to  set  it  aside  because  con- 
trary to  the  law  and  the  evidence,  and  again  moved  the  court  for  leave 
to  file  an  amended  and  supplemental  bill.  The  court  by  its  decree  of 
March  11,  1905,  overruled  the  motion  for  leave  to  plaintiff  to  file  an 
amended  and  supplemental  bill,  because  the  pleadings  already  filed 
sufficiently  raised  all  the  questions  proposed  to  be  raised  by  the 
amended  and  supplemental  bill,  and  all  such  questions  were  presented 
to  the  court  in  the  instructions  asked  for  by  the  complainant  on  the 
trial  of  the  issue,  and  were  then,  after  argument,  decided  against  the 
complainant ;  and  also  overruled  plaintiff's  motion  to  set  aside  the 
verdict  of  the  jury,  and  dissolved  the  injunction  theretofore  awarded 
in  the  cause.  From  this  decree  the  case  is  before  us  for  review  upon 
an  appeal  allowed  to  the  plaintiff  in  the  court  below.     ♦     *     ♦ 

As  claimed  by  counsel  for  appellant,  the  court  by  instructions  A,  R, 
and  C,  practically  took  the  case  from  the  jury  and  left  them  no  room 
to  bring  in  a  verdict  other  than  they  did.  A  told  the  jury  that  the 
papers  introduced   in  evidence    (that   is,  the  contract   and   the   letter 


46  CLASSIFICATION 

from  Robertson  to  Elam  appended  thereto)  together  constitute  an 
option,  and  that  said  option  was  a  unilateral  or  one-sided  contract: 
that  is,  it  set  forth  certain  obligations  assumed  by  the  defendant, 
Robertson,  but  contained  none  assumed  by  or  binding  upon  Elam.  C 
made  the  verdict  depend  in  part  upon  the  disputed  questions  of  fact, 
whether  Robertson  subsequently  sold  the  stock  to  Stuart,  and  whether 
Elam  assented  to  that  sale;  while  B,  on  the  other  hand,  practically 
directed  a  verdict  for  the  defendants,  as  the  facts  upon  which  that 
instruction  is  predicated  were  not  disputed  by  the  plaintiff— that  is, 
that  the  $1  mentioned  in  the  contract  was'  not  actually  paid  by  Elam 
to  Robertson,  and  that  Watkins  did  not  notify  Robertson  of  his  pur- 
chase of  the  stock  on  November  14,  1904,  before  the  attempted  with- 
drawal of  the  option  by  Robertson  on  November  21,  1904. 

As  opposed  to  the  theory  of  the  case  submitted  to  the  jury  by 
these  instructions,  appellant  asked  for,  among  others,  three  instruc- 
tions, Nos.  1,  2,  and  3,  which  the  court  refused.  The  first  is  general 
in  its  terms,  covering  the  ground  specifically  mentioned  in  Nos.  2 
and  3,  which  latter  instructions  set  forth  the  grounds  appearing  on 
the  face  of  the  contract  between  Elam  and  Robertson,  upon  which,  the 
court  should,  as  a  matter  of  law,  have  told  the  jury  that  that  paper 
was  an  irrevocable  option. 

If  the  paper  in  question  is  to  be  regarded,  as  it  was  regarded  by  the 
court  below,  as  merely  an  option  given  without  a  consideration — 
that  is,  an  offer  to  sell — it  might  have  been  withdrawn  by  Robertson 
before  acceptance  by  Elam  or  an  assignee  of  his,  by  notice  to  Elam  or 
such  assignee;  but  if  given  for  a  valuable  consideration  it  could  not 
have  been  withdrawn  by  Robertson  before  the  time  specified  therein 
expired.  Cummins  v.  Beavers,  103  Va.  230,  48  S.  E.  891,  106  Am. 
St.  Rep.  881,  1  Ann.  Cas.  986. 

In  the  case  cited,  the  contract  or  option  was  treated  as  though  the 
consideration  named  therein  was  actually  paid  on  the  day  the  option 
was  written,  and  therefore  the  case  has  but  little  bearing  upon  the  con- 
sideration of  the  question  presented  here. 

Whether  the  contract  here  is  to  be  treated  as  a  contract  made  for  a 
valuable  consideration  depends,  first,  upon  what  force  and  effect  is  to 
be  given  a  contract  under  seal  over  a  like  contract  not  under  seal ; 
and,  second,  whether  the  recital  in  the  contract  that  a  valuable  con- 
sideration had  been  paid  by  Elam  and  received  by  Robertson  estops 
the  latter  in  a  court  of  equity  to  set  up,  as  a  defense  to  a  suit  for  the 
specific  performance  of  the  contract,  that  no  consideration  was  in 
fact  paid  therefor. 

It  is  earnestly  contended  (1)  that  the  paper  shown  by  Elam  to,  and 
relied  upon  by,  appellant  was  a  valid  option,  supported  by  the  neces- 
sary valuable  consideration,  as  evidenced  by  the  solemn  representation 
on  its  face,  and  remained  in  force  from  the  date  of  the  piper,  Oc- 
tober 26.  1904,  to  December  1st  following,  irrevocable  by  Robertson; 
"md  (^2)  that  Robertson  is  estopped  to  deny  the  recital  in  the  paper. 


CONTRACTS   UNDER  SEAL  47 

that  he  had  received  a  valuable  consideration  for  its  execution,  and 
especially  will  not  be  permitted  to  make  this  denial  to  the  prejudice 
of  an  innocent  third  party,  namely,  appellant. 

There  is  much  conflict  among  the  authorities  as  to  whether  courts 
of  equity  will  decree  specific  performance  of  an  executory  contract 
or  covenant  because  it  is  under  seal,  where  it  is  not  also  supported  by 
an  actual  valuable  consideration,  and  many  of  them  take  the  negative 
view ;  but,  undoubtedly,  this  is  to  be  ascribed  to  the  fact  that  the  an- 
cient rule  of  the  common  law,  that  a  seal  conclusively  imports  a  con- 
sideration, has  been  repealed  or  modified  by  statute  in  most  of  the 
states,  and  text-writers  in  citing  cases  fail  in  many  instances  to  make 
allowance  for  this  fact. 

Upon  this  subject  it  is  said  in  section  70,  1  Pomeroy's  Eq. :  "In 
most  of  the  states  all  distinction  between  sealed  and  unsealed  instru- 
ments is  abolished,  except  so  far  as  the  statute  of  limitations  operates 
to  bar  a  right  of  action ;  in  others,  the  only  effect  of  the  seal  upon  ex- 
ecutory contracts  is  to  raise  a  prima  facie  presumption  of  a  consider- 
ation, while  it  is  still  required  on  a  conveyance  of  land ;  in  a  very 
few,  the  common-law  rule  is  retained,  which  makes  the  seal  conclu- 
sive evidence  of  a  consideration." 

In  Virginia  we  have  no  statute  abolishing  or  modifying  the  common- 
law  rule  as  to  the  effect  to  be  given  to  the  seal  upon  executory  con- 
tracts. 

"In  a  contract  under  seal,  a  valuable  consideration  is  presumed 
from  the  solemnity  of  the  instrument  as  a  matter  of  public  policy 
and  for  the  sake  of  peace,  and  presumed  conclusively,  no  proof  to  the 
contrary  being  admitted  either  at  law  or  in  equity  so  far  as  the  par- 
ties themselves  are  concerned."    3  Min.  Inst.  pt.  2,  139. 

We  have  a  number  of  decisions  holding  that  parol  evidence  is  ad- 
missible to  show  what  was  the  real  consideration  for  a  conveyance 
made  of  property,  where  the  conveyance  was  attacked  for  fraud ;  but 
they  have  no  application  here,  and  do  not  impair  the  force  of  the 
statement  which  we  have  just  quoted  from  Minor's  Institutes  to  the 
effect  that  no  proof  is  to  be  admitted,  either  at  law  or  in  equity,  to 
overcome  the  presumption  from  the  solemnity  of  the  contract  under 
seal  that  the  consideration  named  was  actually  paid  as  between  the 
parties  to  the  contract. 

The  case  of  Willard  v.  Tayloe.  8  Wall.  557,  19  L.  Ed.  501,  was  a 
suit  in  equity  for  the  specific  performance  of  a  contract  for  the  sale 
of  certain  real  estate,  and  the  opinion  by  Mr.  Justice  Field  says :  "The 
covenant  in  the  lease  giving  the  right  or  option  to  purchase  the  prem- 
ises was  in  the  nature  of  a  continuing  offer  to  sell.  It  was  a  proposi- 
tion extending  through  the  period  of  ten  years,  and  being  under  seal 
must  be  regarded  as  made  upon  a  sufficient  consideration,  and,  there- 
fore, one  from  which  the  defendant  was  not  at  liberty  to  recede. 
When  accepted  by  the  complainant  by  his  notice  to  the  defendant,  a 
contract  of  sale  between  the  parties  was  completed.     This  contract  is 


48  CLASSIFICATION 

plain  and  certain  in  its  terms,  and  in  its  nature  and  in  the  circum- 
stances attending  its  execution  appears  to  be  free  from  objection. 
*  *  *  When  a  contract  is  of  this  character  it  is  the  usual  practice 
of  courts  of  equity  to  enforce  its  specific  execution  upon  the  applica- 
tion of  the  party  who  has  complied  with  its  stipulations  on  his  part, 
or  has  seasonably  and  in  good  faith  offered,  and  continues  ready  to 
comply  with  them."  The  opinion  further  says  that  it  is  recognized 
that  this  is  not  invariably  the  practice,  and  that  this  form  of  relief 
is  not  a  matter  of  absolute  right  to  either  party,  but  is  a  matter  rest- 
ing in  the  discretion  of  the  court,  to  be  exercised  upon  a  consideration 
of  all  the  circumstances  of  each  particular  case. 

In  O'Brien  v.  Boland,  166  Mass.  481,  44  N.  E.  602,  the  contract 
specifically  enforced  was  an  offer  of  A.  to  sell  houses  to  B.  within  a 
certain  period,  the  contract  being  under  seal,  and  it  was  held  that  the 
contract  was  an  irrevocable  covenant  conditioned  upon  acceptance 
within  the  time  named.  There  it  was  attempted  to  withdraw  the  of- 
fer before  it  had  been  accepted,  and  four  days  afterwards  the  plaintiff 
wrote  to  the  defendant  that  he  had  purchased  in  accordance  with  the 
offer.  The  court  viewing  the  contract  as  an  irrevocable  covenant  con- 
ditioned upon  acceptance  within  the  time  named,  because  it  was  under 
seal,  and  notice  of  the  acceptance  of  the  offer  having  been  given  be- 
fore the  expiration  of  the  time  limit,  compelled  specific  performance 
of  the  contract.  In  that  case,  as  in  the  case  at  bar,  the  contention  was 
made  that  because  the  defendant  could  not  have  compelled  the  plain- 
tiff to  buy  before  his  acceptance  of  the  offer  there  was  a  want  of  mu- 
tuality which  should  defeat  the  bill.  But  the  court  held  that  the  of- 
fer being  under  seal  it  was  an  irrevocable  covenant,  conditioned  upon 
acceptance  within  ten  days,  and  the  written  acceptance  within  that 
time  made  it  a  mutual  contract  which  the  plaintiff  could  enforce.  See, 
also,  Lawson  on  Contracts,  p.  20. 

In  Guyer  v.  Warren,  175  111.  328,  51  N.  E.  580,  the  contract  or  op- 
tion was  in  all  respects  similar  to  the  contract  here  under  considera- 
tion, except  there  the  offer  was  to  sell  land,  while  here  it  is  to  sell 
shares  of  stock  of  the  Watkins-Cottrell  Company;  and  the  suit  was 
for  specific  performance  of  the  contract  in  a  court  of  equity.  In  the 
opinion  in  that  case  it  is  said:  "Such  contracts  are  prefectly  valid, 
and  it  is  now  well  settled  that  a  court  of  equity  may  decree  a  specific 
performance  of  them.  Watts  v.  Kellar,  56  Fed.  1,  5  C.  C.  A.  394. 
The  covenant  in  the  present  contract,  giving  an  option  to  purchase, 
was  in  the  nature  of  a  continuing  offer  to  sell.  It  was  made  under 
seal,  and  hence  must  be  regarded  as  having  been  made  upon  a  suffi- 
cient consideration.  When  the  offer  to  sell  was  accepted  by  the  ap- 
pellant by  his  notice  to  the  appellees,  the  contract  of  sale  between  the 
parties  was  completed,  and  the  appellees  were  not  at  liberty  to  re- 
cede from  it." 

In  Clark  on  Contracts  (Hornbook  Ser.  [2d  Ed.])  p.  33,  it  is  said, 
upon  a  number  of  authorities  cited:  "Where,  however,  an  offer  undei 


CONTRACTS   UNDER  SEAL  49 

seal  in  the  form  of  an  option  is  delivered  to  the  offeree,  the  doctrine 
that  it  cannot  be  revoked  appHes,  and  if  the  option  is  exercised  by  ac- 
ceptance of  the  offer  within  the  time  limited,  the  agreement  will  be 
specifically  enforced,  or  damages  may  be  recovered  for  its  breach." 
O'Brien  v.  Boland,  supra;  Mansfield  v.  Hodgdon,  147  Mass.  304,  17 
N.  E.  544;  Mathews  Slate  Co.  v.  New  Empire  Slate  Co.  (C.  C.)  122 
Fed.  972;  Fuller  v.  Artman,  69  Hun  (N.  Y.)  546,  24  N.  Y.  Supp. 
13;  Willard  v.  Tayloe,  supra;  Smith  v.  Smith,  36  Ga.  184,  91  Am. 
Dec.  761 ;  Donnally  v.  Parker,  5  W.  Va.  301 ;  Weaver  v.  Burr,  31  W 
Va.  736,  8  S.  E.  743,  3  L.  R.  A.  94. 

As  opposed  to  the  views  taken  in  the  authorities  to  which  we  have 
referred,  counsel  for  appellees  rely  on,  among  others,  the  cases  of' 
Graybill  v.  Brugh,  89  Va.  895,  17  S.  E.  558,  21  L.  R.  A.  133,  37  Am. 
St.  Rep.  894,  and  Cummins  v.  Beavers,  supra.  As  already  remarked, 
the  last-named  case  did  not  turn  upon  the  question  here  under  con- 
sideration. The  first  case  was  decided  on  the  ground  that  the  option 
contract  in  question  was  one-sided  and  lacking  in  mutuality,  and  there- 
fore could  not  be  enforced  in  a  court  of  equity;  but  in  the  later 
cases  of  Central  Land  Co.  v.  Johnston,  95  Va.  223,  28  S.  E.  175,  and 
Cummins  v.  Beavers,  supra,  the  decision  in  Graybill  v.  Brugh  was 
practically  overruled.  Other  authorities,  text-writers  and  decided 
cases,  seem  to  sustain  the  view  contended  for  by  appellees  and  taken 
by  the  court  below,  but  as  the  authorities  we  have  cited  as  supporting 
the  view  contended  for  by  appellant  are  founded  upon  what  appears 
to  us  to  be  the  sounder  and  safer  principles  and  are  more  in  accord 
with  the  few  decisions  by  this  court  bearing  upon  the  question  in- 
volved, we  conclude  that  they  should  be  followed. 

In  9  Cyc,  at  pages  287,  288,  it  is  said:  "3  (b).  Options  Under 
Seal. — The  common-law  rule,  that  where  an  offer  is  made  under  seal 
it  cannot  be  revoked,  applies  to  options  given  under  seal.  The  seal 
renders  a  consideration  unnecessary,  and  if  the  option  is  exercised  by 
acceptance  of  the  offer  within  the  time  limited,  the  agreement  will  be 
specifically  enforced,  or  damages  may  be  recovered  for  its  breach, 
notwithstanding  an  attempted  revocation." 

In  support  of  this  text  numerous  authorities  are  cited,  and  those 
we  have  been  able  to  examine  clearly  sustain  the  view  taken.  The 
same  author,  in  a  note  on  page  288,  cites  a  few  cases  to  show  that 
some  of  the  courts  do  not  attach  so  much  sanctity  to  a  seal,  and  allow 
evidence  to  be  produced  to  show  there  was  no  consideration  for  the 
offer.     Among  the  cases  there  cited  is  Graybill  v.  Brugh,  supra. 

In  referring  to  these  cases,  in  6  Pom.  Eq.,  note  to  section  77Z,  it  is 
said,  that  they  must  be  considered  as  wrong  in  principle,  overlooking 
the  fact  that  it  is  a  contract  and  not  an  offer  the  enforcement  of  which 
is  sought.  With  reference  to  Graybill  v.  Brugh  it  is  said  that  the  case 
"should  rest  upon  another  ground — intervening  equitable  right  of  a 
third  party — if  it  is  to  be  supported."     In  discussing  "Unilateral  Coii- 

Tll  ItOCKM.CO.NT. 1 


50     .  CLASSIFICATION 

tracts — Options,"  at  section  77Z,  the  author  says:  "Courts  of  equity 
often  speak  of  enforcing  an  option  as  if  such  enforcement  were  an 
apparent  exception  to  the  rule  of  mutuality.  In  fact,  mutuality  has 
nothing  to  do  ordinarily  with  contracts  of  option.  The  option  is  only 
a  binding  offer.  The  promisor  has  parted  with  the  right  to  withdraw 
his  oft'er.  There  is  nothing  to  enforce  in  equity  before  the  exercise 
of  the  option,  as  the  promisee  has  already  obtained  his  right — to  have 
the  offer  kept  open.  Upon  the  exercise  of  the  option — i.  e.,  the  ac- 
ceptance of  the  offer ;  and  the  filing  of  the  bill  by  the  promisee  would 
be  one  way  of  exercising  it — the  option  ceases  as  an  option,  and  equi- 
ty has  an  ordinary  bilateral  contract  to  deal  with.  Thus  it  is  usually 
said  that  an  option  to  renew  a  lease  is  enforceable  at  the  will  of  the 
lessee  having  the  option.  In  fact  the  lessee  must  first  exercise  his  op- 
tion, and  then  he  has  a  binding  contract  for  the  renewal,  and  not  an 
option.  It  can  make  no  difference  that  defendant  has  tried  to  with- 
draw the  option.  He  bound  himself  not  to  do  so.  This  view  is  fur- 
ther supported  by  the  enforcement  of  an  exercised  option  which  was 
under  seal,  and  without  actual  consideration.  The  oft'er  being  under 
seal  cannot  be  withdrawn.  Upon  its  acceptance,  the  court  cannot  be 
concerned  with  the  lack  of  consideration  [which  is  a  good  defense  to 
specific  performance  in  equity],  for  it  is  the  contract  and  not  the 
option  that  is  being  enforced." 

The  adding  of  the  words  in  brackets  takes  nothing  from  the  force 
of  the  paragraph,  because  the  author  is  there  speaking  of  offers  other 
than  those  under  seal  which  he  says  cannot,  for  the  reason  that  they 
are  under  seal,  be  withdrawn. 

Coming  then  to  the  consideration  of  the  second  proposition,  that 
Robertson  is  estopped  to  deny  that  the  offer  made  in  the  paper  exe- 
cuted by  him  and  Elam  was  for  a  valuable  consideration,  having  re- 
cited therein  the  payment  of  $1 :  The  English  authorities  maintain 
that  the  recital  of  a  valuable  consideration  in  a  deed  is  conclusive.  In 
the  United  States  it  seems  to  be  open  to  question  or  explanation  for 
many  purposes,  but  for  two  it  is  not :  First,  the  recited  consideration 
can  never  be  questioned  or  contradicted  for  the  purpose  of  showing 
that  the  deed  was  not  founded  on  a  valuable  consideration  and  so 
defeat  it ;  nor,  second,  for  the  purpose  of  raising  a  resulting  trust  in 
the  grantor.  What  is  meant  is  that  a  party  making  a  deed  or  oft'er  to 
sell,  in  Writing,  cannot  himself  deny  the  recital  in  the  paper  he  ex- 
ecuted for  the  purpose  of  invalidating  his  contract  or  conveyance,  or 
to  raise  a  resulting  trust  in  himself.  The  recital  cannot  be  disproved 
but  must  be  treated  as  conclusive  for  the  purpose  of  giving  effect  to 
the  operative  words  of  the  conveyance  or  oft'er.  McCrea  v.  Purmort, 
16  Wend.  (N.  Y.)  460,  30  Am.  Dec.  103;  Devlin  on  Deeds,  §  834. 

While,  as  between  the  parties  to  a  deed  of  conveyance,  or  even  an 
executory  contract,  the  recital  of  the  receipt  of  the  consideration  would 
not  preclude  a  recovery  of  the  purchase  money  due,  in  the  one  case, 
or  the  real  amount  of  the  consideration  in  the  other,  the  recital  of  the 


CONTRACTS   UNDER   SEAL  51 

payment  of  a  consideration  cannot  be  contradicted  so  as  to  defeat  the 
operation  of  the  conveyance  according  to  the  purpose  therein  desig- 
nated, unless  it  be  on  the  ground  of  fraud  or  illegahty.  So  the  obligor 
in  a  bond  which  expressly  acknowledges  a  consideration  is  estopped 
to  deny^  the  consideration  for  the  purpose  of  avoiding  the  bond  in  the 
absence  of  any  fraud  or  mistake.    24  Am.  &  Eng.  Ency.  L.  64. 

The  case  of  Lawrence  v.  McCalmont,  2  How.  445,  11  L.  Ed.  326, 
held  that  the  principle  applied  to  executory  contracts  not  under  seal. 
And  to  the  same  effect  is  Silver  v.  Kent  (C.  C.)  105  Fed.  840. 

The  case  of  Guard  v.  Bradley,  7  Ind.  600,  was  a  suit  for  the  spe- 
cific performance  of  a  bond,  and  the  opinion  says:  "The  appellants 
insist  that  the  bond  was  without  consideration,  and  that,  being  merely 
voluntary,  a  court  of  equity  will  not  enforce  it.  We  have  no  doubt 
upon  the  point  that  a  court  of  equity  will  not  enforce  the  specific  exe- 
cution of  a  contract  merely  voluntary  and  without  consideration,  at  the 
instance  of  a  volunteer  (citing  authorities).  But  are  the  obligors  in 
the  bond  in  an  attitude  to  claim  the  benefit  of  that  rule?  We  think 
they  are  not.  This  bond  or  agreement  under  seal  states  that  the  con- 
sideration of  it  is  the  conveyance  made  to  the  obligors  by  Ezra  Guard. 
By  this  recital  they  are  estopped,  and  cannot  say  it  was  without  con- 
sideration. Trimble  v.  State,  4  Blackf.  (Ind.)  435;  May  v.  Johnson,  3 
Ind.  449." 

The  case  of  Fuller  v.  Artman,  supra,  was  a  suit  of  an  assignee  to 
enforce  specific  performance  of  an  option  under  seal,  and  is,  therefore, 
a  case  in  point.  On  its  face  it  was  recited  that  the  option  was  in  con- 
sideration "of  one  dollar  and  other  valuable  consideration,  the  receipt 
wherefore  is  hereby  acknowledged,"  though  nothing  had  in  fact 
passed.  The  opinion  says:  "The  evidence  (i.  e.,  that  no  valuable  con- 
sideration had  actually  passed),  was  no  doubt  properly  excluded.  ^  If 
admitted,  it  would  have  done  violence  to  some  elementary  principle 
of  the  law  of  evidence  bearing  upon  the  credit  and  validity  belonging 
to  instruments  in  writing  and  under  seal.  The  principles  referred  to 
may,  perhaps,  be  embodied  in  a  rule  to  the  effect  that  while  the  mere 
presumption  of  a  consideration  which  arises  from  the  use  of  seals  in 
the  execution  of  the  instrument  is  subject  to  rebuttal  (Code  Civ.  Proc. 
§  840),  the  expression  of  a  consideration  in  such  instrument,  is  not 
subject  to  contradiction  for  the- purpose  or  with  the  effect  of  invalidat- 
ing the  instrument.  Murdock  v.  Gilchrist,  52  N.  Y.  246;  Rockwell 
v.  Brown,  54  N.  Y.  213.  The  recital  of  a  consideration  in  a  deed  is 
conclusive  as  to  the  fact  that  there  was  a  consideration  for  the  deed. 
Grout  V.  Townsend,  2  Denio  (N.  Y.)  336;  Murdock  v.  Gilchrist, 
supra.  The  consideration  actually  paid  or  promised  may  be  shown 
to  have  been  other  than  that  recited  in  the  instrument,  or  the  fact 
of  payment  of  the  consideration  agreed  upon  may  be  contradicted  in 
an  action  for  its  recovery,  but  the  existence  of  a  sufficient  considera- 
tion when  expressed  in  an  instrument  under  seal  is  not  subject  to  dis- 
pute." 


52  CLASSIFICATION 

As  it  seems  to  us,  the  rule  would  apply  with  greater  force  where  the 
right  of  a  third  party  to  enforce  the  contract  is  involved. 

Specific  performance  was  decreed  in  Mathews  Slate  Co.  v.  New 
Empire  Slate  Co.,  supra,  upon  precisely  these  grounds.  The  principle 
is  applied  uniformly  to  insurance  cases  where  the  policy  contains  a 
formal  acknowledgment  of  the  receipt  of  the  premium,  upon  the  ground 
that  this  acknowledgment  should  prevent  the  insurer  from  averring 
and  showing  nonpayment  of  the  premium  for  the  purpose  of  denying 
that  the  contract  ever  had  any  legal  existence.  Says  the  opinion  in 
Basch  V.  Humholdt,  etc.,  Ins.  Co.,  35  N.  J.  Law,  429:  "What  does 
this  receipt  in  its  connection  with  the  delivery  of  the  instrument,  im- 
port if  it  does  not  mean  that  the  payment  of  the  premium  is  conclu- 
sively admitted  to  the  extent  that  such  payment  is  necessary  to  give 
vitality  to  the  contract?  Unless  this  be  its  meaning,  it  serves  no  legal 
office,  for  it  does  not  mean  that  the  money  has  been  actually  received. 
*  *  *  This  policy  of  insurance  purports  to  have  an  effect  imme- 
diate on  delivery,  founded  on  a  paid-up  consideration.  It  does  not 
seem  competent  for  the  promisor  to  prove  that  the  acknowledgment 
is  not  true,  and  that  the  contract  never  had  .any  existence.  *  *  * 
The  usual  legal  rule  is  that  a  receipt  is  only  prima  facie  evidence  of 
payment,  and  may  be  explained;  but  this  rule  does  not  apply  when 
the  question  involved  is  not  only  as  to  the  fact  of  payment,  but  as  to 
the  existence  of  rights  springing  out  of  the  contract.  With  a  view 
of  defeating  such  rights  the  party  giving  the  receipt  cannot  contra- 
dict it.  An  acknowledgment  of  an  act  done,  contained  in  a  written 
contract,  and  which  act  is  requisite  to  put  it  in  force,  is  as  conclusive 
against  the  party  making  it  as  is  any  other  part  of  the  contract.  It 
cannot  be  contradicted  or  varied  by  parol." 

In  a  similar  case,  Kendrick  v.  Life  Ins.  Co.,  124  N.  C.  315,  32  S. 
E.  728,  70  Am.  St.  Rep.  592,  the  court  says :  "The  authorities  are 
numerous  and  quite  uniform  that  the  acknowledgment  in  the  policy  of 
the  receipt  of  the  premium  estops  the  company  to  contest  the  policy 
on  the  ground  of  nonpayment  of  the  premium.  In  so  far  as  it  is  a 
mere  receipt  for  money,  it  is  only  prima  facie  like  other  receipts,  and 
will  not  prevent  an  action  to  recover  the  money,  if  not  in  truth  paid ; 
but  in  so  far  as  it  is  a  part  of  the  contract  of  insurance,  it  cannot  be 
contradicted  by  parol  to  invalidate  the  contract,  in  the  absence  of 
fraud  in  procuring  the  delivery  of  the  policy."  In  support  of  the  prin- 
ciple declared  a  long  list,  of  authorities  are  cited. 

It  seems  to  us  clear,  both  upon  reason  and  authority,  that  in  this 
case  Robertson  should  not  be  permitted  to  deny,  certainly  as  to  Wat- 
kins  who,  in  his  dealing  with  Elam,  undoubtedly  relied  upon  the  posi- 
tive representation  on  the  face  of  the  contract  in  question  that  he 
(Robertson)  had  received  the  consideration  necessary  to  its  validit} 
and  binding  force.  As  we  view  this  case,  it  would  be  a  denial  of 
justice  and  a  pernicious  sanction  of  unfair  dealing  to  hold  that  Rob- 
ertson, who  had  by  his  contract  in  writing,  under  seal,  executed  and 


CONTRACTS   UNDER   SEAL  53 

delivered  to  Elam,  reciting  that  it  was  made  and  executed  for  a  valu- 
able consideration  received,  bound  himself  not  to  withdraw  his  offer 
therein  made  to  sell'  to  Elam  or  his  assigns  the  496  shares  of  the  cap- 
ital stock  of  the  Watkins-Cottrell  Company  until  December  1,  1904, 
could,  after  Watkins  had  been  shown  the  contract,  and,  relying  upon 
its  binding  force  and  eft"ect  upon  Robertson,  before  the  time  limit 
therein  named  had  expired,  accepted  the  offer  and  offered  to  pay  the 
purchase  price  for  the  stock,  defeat  the  very  object  and  purpose  of 
the  contract  by  merely  showing  that  this  recital  in  the  contract  of  the 
receipt  of  a  valuable  consideration  was  untrue. 

Contracts  or  options  of  this  character  have,  at  this  day,  become  of 
common  use  in  the  business  world,  and  dealings  had  in  reliance  upon 
them  would  become  very  uncertain,  risky,  and  undesirable  if  such  a 
contract,  as  a  matter  of  law,  may  be  converted  into  a  snare  and  a  de- 
lusion by  permitting  the  party  making  it  to  withdraw  from  or  break 
it  before  it  expires  by  its  own  terms,  as  though  the  contract  were  not 
under  seal,  and  did  not  contain  a  recital  that  a  valuable  consideration 
had  been  paid  therefor.  Safety  and  fair  dealing  in  transactions  of 
this  character  require  that  such  contracts  be  regarded  as  sacred,  and 
as  binding  upon  the  parties  intended  to  be  bound  thereby  as  other  con- 
tracts which  can  only  be  defeated,  impeached,  or  avoided  for  fraud  or 
illegality. 

We  are  of  opinion,  therefore,  that  the  court  below  should  have  re- 
fused appellees'  instructions  A,  B,  and  C,  and  given  appellant's  in- 
structions Nos.  1,  2,  and  3. 

The  refusal  of  the  court  to  give  certain  instructions  asked  by  appel- 
lant, predicated  upon  the  agency  of  Elam  for  the  sale  of  Robertson's 
stock  in  question,  and  submitting  that  question  of  fact  to  the  jury, 
is  assigned  as  error.  But  in  the  view  we  have  taken  of  the  case  it  is 
unnecessary  to  consider  this  assignment.  Nor  do  we  consider  it  ex- 
pedient to  express  an  opinion  as  to  the  weight  of  the  evidence  certified 
in  the  record,  as  the  case,  because  of  misdirection  of  the  jury  and 
the  admission  of  improper  evidence  has  to  be  remanded  for  a  new 
trial  of  the  issue  out  of  chancery,  should  the  court  deem  it  proper  to 
submit  again  the  issue  to  a  jury. 

The  decree  appealed  from  is  reversed  and  annulled,  and  the  cause 
remanded  to  be  further  proceeded  with,  in  accordance  with  the  views 
expressed  in  this  opinion. 


54  EEQUIKED   TO    BE   IN    WEITINO 


CONTRACTS  REQUIRED  TO  BE  IN  WRITING— STATUTE 

OF  FRAUDS 

I.  In  General — Executed  Contracts  ^ 


STONE  V.  DENNISON. 

(Supreme  Judicial  Court  of   Massactiusetts,   1832.     13   Pick.   1, 
23  Am.  Dec.  654.) 

At  the  trial,  before  Wilde,  J.,  the  plaintiff  proved  that  he  had  been 
in  the  service  of  the  defendant  from  October,  1818,  to  October,  1828, 
when  he  became  twenty-one  years  of  age ;  and  he  introduced  evidence 
tending  to  show  that  his  services  were  worth  more  than  the  support 
and  education  furnished  him  by  the  defendant.  Evidence  was  offered 
by  the  defendant  tending  to  show  the  contrary,  and  that  the  agree- 
ment was  a  reasonable  one. 

The  defendant  contended  that  he  was  not  liable,  because  at  the  time 
when  the  plaintiff  was  fourteen  years  of  age,  his  father  being  dead, 
George  Eels  was  duly  appointed  his  guardian,  and  it  was  agreed  be- 
tween the  plaintiff,  the  defendant  and  the  guardian  that  the  plaintiff 
should  continue  in  the  service  of  the  defendant,  until  he  should  arrive 
at  the  age  of  twenty-one,  for  his  board,  clothing  and  education,  and 
the  defendant  had  performed  the  contract  on  his  part. 

The  plaintiff  objected  to  the  admission  of  evidence  to  prove  these 
allegations: 

(1)  Because  the  supposed  contract  was  void  by  the  statute  of 
frauds,  it  not  being  in  writing.     *     *     * 

The  jury  foundl  a  verdict  for  the  defendant,  and  the  plaintiff  moved 
for  a  new  trial.     *     *     * 

Shaw,  C.  J.*  Several  points  were  left  to  the  jury  in  the  present 
case,  which  may  be  considered  as  settled  by  their  verdict. 

By  the  report  it  appears  that  after  the  plaintiff  arrived  at  the  age 
of  fourteen  years,  having  then  lived  several  years  with  the  defendant, 
it  was  agreed  between  the  plaintiff  and  his  guardian  on  the  one  side. 
and  the  defendant  on  the  other,  that  the  plaintiff  should  continue  in 
the  service  of  the  defendant  until  he  should  arrive  at  the  age  of  twenty- 
one,  for  his  board,  clothing  and  education.  By  the  finding  of  the  jury, 
under  the  instructions  given  to  them  by  the  court,  it  must  be  taken  to 
have  been  settled,  that  the  contract  was  not  obtained  by  any  unfair 
means,  or  fraudtilent,  on  the  part  of  the  defendant,  and  that  it  was 
not  unequal,  so  as  to  show  that  the  plaintiff  was  overreached. 

1  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §  37. 

2  The  statement  of  facts  is  abridged  and  a  portion  of  the  opinion  omitted. 


IN  GENERAL — EXECUTED  CONTRACTS  55 

The  case  then  is  one  of  a  minor  over  fourteen  years  of  age,  enter- 
ing into  an  agreement  with  a  person,  for  labor  and  service  to  be  fur- 
nished on  one  side,  and  subsistence,  clothing  and  education  on  the  oth- 
er, an  agreement  in  which  the  minor  was  not  overreached,  which  was 
not  so  unreasonable  as  to  raise  any  suspicion  of  fraud,  and  which  was 
assented  to  and  sanctioned  by  the  guardian  of  the  minor.  This  agree- 
ment is  fully  executed  on  both  sides.  The  labor  and  services  are  per- 
formed by  the  minor,  and  the  stipulated  compensation  is  furnished  by 
his  employer.  And  the  question  is,  whether  the  plaintiff,  not  with- 
standing such  agreement,  can  maintain  a  quantum  meruit  for  his  serv- 
ices, merely  by  showing  that  in  the  event  which  has  happened  his 
services  were  worth  more  than  the  amount  of  the  stipulated!  compensa- 
tion ;   and  we  think  he  cannot. 

The  first  point  taken  by  the  plaintiff  is  that  the  evidence  of  the 
agreement  ought  not  to  have  been  admitted,  because  the  agreement, 
not  being  to  be  performed  within  a  year,  and  not  being  in  writing, 
was  void  by  the  statute  of  frauds.    St.  1788.  c.  16,  §  1. 

But  we  think  this  objection  is  answered  by  the  consideration  that 
here  the  contract  has  been  completely  performed  on  both  sides.  The 
defendant  is  not  seeking  to  enforce  this  agreement  as  an  executory  con- 
tract, but  simply  to  show  that  the  plaintiff  is  not  entitled  to  recover 
upon  a  quantum  meruit  as  upon  an  implied  promise.  But  the  statute 
does  not  make  such  a  contract  void.  The  provision  is,  that  no  action 
shall  be  brought,  whereby  to  charge  any  person  upon  any  agreement, 
which  is  not  to  be  performed  within  the  space  of  one  year,  unless  the 
agreement  shall  be  in  writing.  The  statute  prescribes  the  species  of 
evidence  necessary  to  enforce  the  execution  of  such  a  contract.  But 
where  the  contract  has  been  in  fact  performed,  the  rights,  duties,  and 
obligations  of  the  parties  resulting  from  such  performance  stand  un- 
affected by  the  statute. 

In  the  case  of  Boydell  v.  Drummond,  11  East,  142,  a  case  was  put 
in  the  argument  of  goods  sold  and  delivered  at  a  certain  price,  by 
parol,  upon  a  credit  of  thirteen  months.  There,  as  a  part  of  the  con- 
tract was  the  payment  of  the  price,  which  was  not  to  be  performed 
within  the  year,  a  question  is  made,  whether  by  force  of  the  statute 
the  purchaser  is  exempted  from  the  obligation  of  the  agreement  as  to 
the  stipulated  price,  so  as  to  leave  it  open  to  the  jury  to  give  the  value  of 
the  goods  only,  as  upon  an  implied  contract.  "In  that  case,"  said  Lord 
Ellcnborough,  "the  delivery  of  the  goods,  which  is  supposed  to  be  made 
within  the  year,  would  be  a  complete  execution  of  the  contract  on  the 
one  part ;  and  the  question  of  consideration  only  would  be  reserved 
to  a  future  period." 

If  a  performance  upon  one  side  would  avoid  the  operation  of  the 
statute,  a  fortiori  would  the  entire  and  complete  performance  on  both 
sides  have  that  effect.  Take  the  common  case  of  a  laborer  entering 
into  a  contract  with  his  cmi)loycr  towards  the  close  of  a  year,  for  an- 
other year  s  service,  upon  certain  stipulated  terms.     Should  either  par- 


56  EEQUIEED  TO   BE   IN  WKITING 

ty  tefuse  to  perform,  the  statute  would  prevent  either  party  from 
bringing  any  action  whereby  to  charge  the  other  upon  such  contract. 
But  it  would  be  a  very  different  question  were  the  contract  fulfilled 
upon  both  sides,  by  the  performance  of  the  services  on  the  one  part 
and  the  payment  of  money  on  account,  from  time  to  time,  on  the  oth- 
er, equal  to  the  amount  of  the  stipulated  wages.  In  case  of  the  rise  of 
wages  within  the  year,  and  the  consequent  increased  value  of  the  serv- 
ices, could  the  laborer  bring  a  quantum  meruit,  and  recover  more ;  or 
in  case  of  the  fall  of  labor  and  the  diminished  value  of  the  services, 
could  the  employer  bring  money  had  and  received  and  recover  back 
part  of  the  money  advanced!,  on  the  ground  that  by  the  statute  of 
frauds  the  original  contract  could  not  have  been  enforced?  Such,  we 
think,  is  not  the  true  construction  of  the  statute. 

We  are  of  the  opinion  that  it  has  no  application  to  executed  con- 
tracts, and  that  the  evidence  of  this  contract  was  rightly  admitted. 
*    »    *     Judgment  on  the  verdict. 


II.  Contracts  Within  Section  4  « 
1.  Promise  by  Executor  or  Administratob 


BELLOWS  V.   SOWLES. 

(Supreme  Court  of  Vermont,  1884.     57  Vt.   164,  52  Am.  Rep.  118.) 

Assumpsit.  Heard  on  demurrer  to  the  declaration,  September  Term, 
1883,  Franklin  County,  Royce,  C.  J.,  presiding.  Demurrer  overruled. 
The  declaration  alleged  in  substance: 

Thatjhe  plaintiff  was  a  relative  and  heir-at-law  of  Hi  rani  Bellows, 
deceased;  that  by  the  terms  of  said  Bellows'  will,  pres^ented  lO-Jiie 
Probate  Court  for  allowance,  no  provision  was  made  for  .the-4ilainti£L;, 
tharth^  plaintiff  "claimed  and  insisted  that  he  was  left  out  of  ^aidjwill2_ 
and  that  no  provision  *  *  *  was  made  for  the  plaintiff  through 
undue  influence  had  and  used  upon  said  Bellows  by  said  defendant  and^ 
his  wife,  INIaggie  Sowles,  and  that  saidi  will  was  void,  and  should  not 
be  approved;  that  he  had  employed  counsel  to  test  the  validity  of 
said  will  before  the  Probate  Court ;  that  similar  claims'  were  made  by 
other  heirs" ;  "and  whereas  the  said  defendant  being  then  and  there 
the  executor  named  in  said  will,  and  being  largely  interested  pecuniarily 
in  said  estate  as  legatee  and  the  husband  of  the  principal  legatee  under 
said  will,  and  well  knowing  the  claim  of  the  plaintiff,  and  that  he  had 
employed  counsel  as  aforesaid,  and  that  other  heirs  were  then  and  there 

8  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  39^3. 


OONTEACTS  WITHIN   SECTION  4  57 

making  similar  claims,  and  being  anxious  to  have  said  will  sustained, 
had  also  employed  counsel  for  that  purpose;  and  it  was  then  and 
there  expected  by  the  parties  that  a  contest  would  be  had  upon  the 
approval  of  said  will,  which  would  involve  the  expenditure  of  a  large 
amount  of  money,  and  hinder  and  delay  the  settlement  of  said  Bel- 
lows' estate,  and  the  receipt  by  the  said  defendant  and  his  said  wife 
of  their  said  legacies" ;  that  the  plaintiff  met  the  defendant  by  ap- 
pointment at  defendant's  house,  and  that  the  matters  relating  to  the 
will  were  talked  over ;  that  "the  plaintiff,  at  the  special  instance  and 
request  of  the  said  defendant,  would  see  one  Charlotte  Law,  who  was 
one  of  the  "heirs  of  said  Bellows,  and  who  was  then  and  there  intend- 
ing to  contest  the  validity  of  said  will,  and  use  his  influence  to  have 
her  allow  said  will  to  be  approved,  and  that  the  plaintiff  forbear  to 
corrteiFthe  approval  of  said  will  of  said  Bellows,  and  allow  the  same 
to  be  "approved  by  the  Probate  Court  aforesaid,  and  would  not  ap- 
peal from  the  decision  of  said  court,"  he,  the  said  defendant,  under- 
tooTc,  and  then  and  there  faithfully  promised  to  pay  the  plaintiff  the 
sum  of  $5,000,  whenever,  after  twenty  days  had  elapsed  from  the  date 
of  the  approval  of  said  will  by  said  Probate  Court  he  should  be  there- 
unto  requested.     *     *     * 

"And  the  plaintiff  avers,  that,  confiding  in  the  promise  and  under- 
taking of  the  said  defendant  so  made  as  aforesaid,  afterwards,  to  wit. 
on  the  day  and  year  aforesaid,  he  did  see  said  Charlotte  Law,  and  did 
jiuse  his  influence  with  her  to  allow  said  will  to  be  approved,  and  did 
^1 ''  forbear  to  contest  the  approval  of  said  will  of  said  Bellows,  and  did 
^<  allow  the  same  to  be  approved  by  said  Probate  Court,  and  did  not  ap- 
peal  from  said  approval"  ;  *  *  *  that  said  will  was  duly  approved 
on  the  7th  day  of  December,  1876  ;  that  no  appeal  was  taken ;  that 
the  twenty  days  has  elapsed;  and  that  defendant,  though  requested, 
has  wholly  neglected  and  refused  to  pay  the  said  $5,000,  &c.  There 
was  a  second  count,  substantially  like  the  first,  alleging,  that  the  plain- 
tiff was  heir-at-law  of  said  Bellows ;  that  he  received  nothing  under 
the  will;  that  the  will  was  made  as  it  was,  and  plaintiff  left  out, 
"through  undue  influence  and  by  procurement  of  the  said  defendant 
and  his  said  wife,  and  that  said  will  was  void" ;  that  he  had  arranged 
to  contest  the  vahdity  of  the  will ;  that  this  was  known  to  the  defend- 
ant ;  that  it  was  "expected  by  the  parties  that  long  and  expensive  litiga- 
tion would  ensue,  which  would  delay  the  settlement  of  said  Bellows' 
estate,  and  prevent  the  said  defendant  and  his  said  wife  from  receiving 
the  large  sums  of  money  which  they  expected  from  said  estate,  as  they 
otherwise  would" ;  that  the  defendant  "being  pecuniarily  interested  in 
said  estate  to  a  large  amount  as  legatee,  as  husband  of  the  largest  leg- 
atee under  the  will,"  &c. ;  that  defendant  promised  to  pay  plaintiff 
the  sum  of  $5,000  if  he  would  forbear  to  contest  the  will;  that  he  did 
forbear,  in  consideration  of  the  promise,  &c.,  &C 
The  common  counts  followed. 


58  REQUIRED  TO   BE   IN   WRITING 

Powers,  J.  Counsel  for  the  defendant  have  demurred  to  the  declara- 
tion in  this  case  upon  two  grounds ;  first,  that  the  consideration  alleged 
is  insufficient ;  secondly,  that  the  promise  not  being  in  writing  comes 
within,  and  is  therefore  not  enforceable  under,  the  Statute  of  Frauds. 

It  has  been  so  often  held  that  forbearance  of  a  legal  right  affords  a 
sufficient  consideration  upon  which  to  found  a  valid  contract,  and 
that  the  consideration  required  by  the  Statute  of  Frauds  does  not  differ 
from  that  required  by  the  common  law,  it  does  not  appear  to  us  to 
be  necessary  to  review  the  authorities,  or  discuss  the  principle.  As 
to  the  second  point  urged  in  behalf  of  the  defendant,  this  case  presents 
greater  difficulties.  Although  the  Statute  of  Frauds  was  enacted  two 
centuries  ago,  and  even  then  was  little  more  than  a  re-enactment  of 
the  pre-existing  common  law,  and  though  cases  have  continually  aris- 
en under  it,  both  in  England  and  America,  yet  so  confusing  and  at 
times  inconsistent  are  the  decisions,  that  its  consideration  is  always 
attended  with  difficulty  and  embarrassment. 

The  best  understanding  of  the  statute  is  derived  from  the  language 
itself,  viewed  in  the  light  of  the  authorities  which  seem  to  us  to  in- 
terpret its  meaning  as  best  to  attain  its  object.  That  clause  of  the  stat- 
ute under  which  this  case  falls,  reads:  "No  action  at  law  or  in  equity 
shall  be  brought  *  *  *  upon  a  special  promise  of  an  executor  or 
administrator  to  answer  damages  out  of  his  own  estate." 

This  special  promise  referred  to  is,  in  short,  any  actual  promise  made 
by  an  executor  or  administrator,  in  distinction  from  promises  implied 
by  law,  which  are  held  not  within  the  statute. 

The  promise  must  be  "to  answer  damages  out  of  his  own  estate." 
This  phraseology  clearly  implies  an  obligation,  duty,  or  liability  on  the 
part  of  the  testator's  estate,  for  which  the  executor  promises  to  pay 
damages  out  of  his  own  estate.  The  statute,  then,  was  enacted  to  pre- 
vent executors  or  administrators  from  being  fraudulently  held  for  the 
debts  or  liabilities  of  the  estates  upon  which  they  were  called  to  ad- 
minister. In  this  view  of  the  case,  this  clause  of  the  statute  is  closely 
allied,  if  not  identical  in  principle,  with  the  following  clause,  namely : 
"No  action,  etc.,  upon  a  special  promise  to  answer  for  the  debt,  default 
or  misdoings  of  another."  And  so  Judge  Royce,  in  delivering  the 
opinion  of  the  court  in  Harrington  v.  Rich,  6  Vt.  666,  declares  these 
two  classes  of  undertakings  to  be  "very  nearly  allied,"  and  considers 
them  together.  This  seems  to  us  to  be  the  true  idea  of  this  clause  of 
the  statute — that  the  undertaking  contemplated  by  it,  like  that  contem- 
plated by  the  next  clause,  is  in  the  nature  of  a  guaranty;  and  that 
reasoning  applicable  to  the  latter  is  equally  applicable  to  the  former. 

We  believe  this  view  to  be  well  supported  by  the  authorities. 
Browne,  in  his  work  on  the  Statute  of  Frauds,  p.  150,  says:  "In  the 
fourth  section  of  the  Statute  of  Frauds,  special  promises  of  executors 
and  administrators  to  answer  damages  out  of  their  own  estates  appear 
to  be  spoken  of  as  one  class  of  that  large  body  of  contracts  known  as 
guaranties."    And  so  on  page  184,  he  interprets  "to  answer  damages" 


CONTRACTS   WITHIN   SECTION  4  59 

as  equivalent  to  pay  debts  of  the  decedent.  This  seems  to  be  the  con- 
struction given  to  the  statute  by^Chief  Justice  Redfield,  in  his  work  on 
Wills,  vol.  II,  p.  290,  et  seq. 

The  Revised  Statutes  of  New  York,  vol.  II,  p.  113,  have  improved 
upon  the  phraseology  of  the  old  statute  as  we  have  adopted  it  by  add- 
ing, "or  to  pay  the  debts  of  the  testator  or  intestate  out  of  his  own 
estate." 

If  we  are  correct  in  this  view  of  the  relation  between  these  two  claus- 
es, the  solution  of  the  question  presented  by  this  case  is  comparatively 
easy. 

It  has  been  held  in  this  State,  that  when  the  contract  is  founded  upon 
a  new  and  distinct  consideration  moving  between  the  parties,  the  un- 
dertaking is  original  and  independent,  and  not  within  the  statute. 
Ternpleton  v.  Bascom,  33  Vt.  132 ;  Cross  v.  Richardson,  30  Vt.  641  ; 
Lampson  v.  Hobart,  28  Vt.  697.  Whether  or  not  it  would  be  safe  to 
announce  this  as  a  general  rule  of  universal  application,  it  is  a  principle 
of  law  well  fortified  by  authority,  that  where  the  principal  or  imme- 
diate object  of  the  promisor  is  not  to  pay  the  debt  of  another,  but  to 
subserve  some  purpose  of  his  own,  the  promise  is  original  and  inde- 
pendent, and  not  within  the  statute.  Brandt  Sur.  72  ;  3  Par.  Cont.  24  ; 
Rob.  Fr.  232 ;  Emerson  v.  Slater,  22  How.  28,  16  L.  Ed.  360.  And 
this  seems  to  be  the  real  ground  of  the  decisions  above  cited  in  the 
28th  and  30th  Vt.,  in  which  the  court  seems  to  blend  the  two  rules  just 
laid  down. 

Pierpoint,  J.,  in  delivering  the  opinion  of  the  court  in  Cross  v.  Rich- 
ardson, supra,  says :  "The  consideration  must  be  not  only  sufficient 
to  support  the  promise,  but  of  such  a  nature  as  to  take  the  promise 
out  of  the  statute;  and  that  requisite,  we  think,  is  to  be  found  in 
the  fact  that  it  operates  to  the  advantage  of  the  promisor,  and  places 
him  under  a  pecuniary  obligation  to  the  promisee,  entirely  independent 
of  the  original  debt." 

Apply  this  rule  to  this  case.  Here  the  main  purpose  of  this  promise 
was,  not  to  answer  damages  (for  the  testator)  out  of  his  own  estate, 
but  was  entirely  to  subserve  some  purpose  of  the  defendant.  The  con- 
sideration did  not  afifect  the  estate,  but  was  a  matter  purely  personal  to 
the  defendant.  Here  there  was  no  liability  or  obligation  on  the  part 
of  the  estate  to  be  answered  for  in  damages.  It  could  make  no  differ- 
ence to  the  executor  of  that  estate  whether  it  was  to  be  divided  accord- 
ing to  the  will,  or  by  the  law  of  descent.  If  the  subject  matter  of  this 
-contract  had  been  something  entirely  foreign  to  this  estate,  no  one 
would  maintain  that  the  defendant  was  not  bound  by  it,  because  he 
happened  to  be  named  executor  in  this  will.  Here  the  subject  matter 
of  the  contract  was  connected  with  the  estate,  but  in  such  a  way  that 
it  was  practically  immaterial  to  the  estate  which  way  the  qucslion  was 
decided. 

There  exists,  therefore,  in  this  case,  no  sufficient,  actual,  primary 
liability  to  which  this  promise  could  be  collateral.     This  seems  to  us 


60  REQUIRED   TO    BE   IN    WRITING 

to  be  the  fairest  interpretation  of  the  law.  The  statute  was  passed  for 
the  benefit  of  executors  and  administrators;  but  it  might  be  said  of 
it,  as  has  been  said  of  the  protection  afforded  to  an  infant  by  the  law 
of  contracts,  that  "it  is  a  shield  to  protect,  not  a  sword  to  destroy." 
If  this  class  of  contracts  was  allowed  to  be  avoided  under  it,  instead 
of  being  a  prevention  of  frauds,  it  would  become  a  powerful  instru- 
ment for  fraud.  As  in  this  case,  the  plaintiff  would  be  deprived  of  his 
legal  right  to  contest  the  will,  by  a  party  who  has  reaped  all  the  benefit 
of  the  transaction,  and  is  shielded  from  responsibility  by  a  technicality. 
We  do  not  believe  this  was  the  result  contemplated  by  the  statute. 

The  judgment  of  the  County  Court  overruling  the  demurrer  and  ad- 
judging the  declaration  sufficient  is  affirmed,  and  case  remanded!  with 
leave  to  the  defendant  to  replead  on  the  usual  terms. 


2.  Promise  to  Answer  for  Debt,  Default,  or  Miscarriage  of 

Another 


LARSON  v.  JENSEN. 

(Supreme  Court  of  Michigan,  1884.     53  Mich.  427,  19  N.  W.  130.) 

Champlin,  J.  The  plaintiff  claimed  that  he  entered  into  an  agree- 
ment with  defendant  by  which  he  was  to  furnish  and  deliver  to  one 
John  Labonta  an  unlimited  amount  of  merchandise,  as  he,  Labonta, 
might  call  for,  or  order  by  mail,  or  otherwise ;  and  defendant  was  to 
pay  plaintiff  for  all  the  goods  so  ordered  or  called!  for  by  Labonta ;  that 
in  pursuance  of  that  agreement  plaintiff  delivered  goods  to  Labonta, 
from  time  to  time,  at  the  request  of  defendant,  and,  at  the  time  this 
action  was  brought,  plaintiff  claimed  a  balance  due  him  of  about  $400. 
On  the  trial  the  plaintiff  gave  evidence  tending  to  prove  the  contract 
as  alleged  in  the  declaration.  The  plaintiff  was  the  only  witness  who 
testified  to  the  contract,  and  his  statement  of  it  was  denied  by  the  de- 
fendant, who  testified  that  he  told  plaintiff  that  Labonta,  his  son-in- 
law,  was  intending  to  engage  in  trade  in  a  small  way;  that  he  had  a 
little  money  and  that  he  would  help  him  a  little ;  and  asked!  plaintiflf  if 
he  could  not  let  Labonta  have  some  goods,  and  he  said  he  would. 

The  defendant  contends  that  the  contract,  as  set  out  in  the  plaintiff's 
declaration,  is  voidi  as  being  against  the  statute  of  frauds,  for  the  rea- 
son that  the  promise  of  defendant  is  collateral,  and  is  only  to  pay  the 
debt  or  default  of  Labonta.  This  is  a  mistake.  The  promise  and  un- 
dertaking of  defendant,  as  alleged  in  the  declaration,  is  an  original 
promise,  andl  rests  upon  a  sufficient  consideration.  The  goods  were 
to  be  furnished  to  Labonta,  it  is  true,  but  upon  the  express  agreement 


CONTEACTS   WITHIN   SECTION  4  61 

that  defendant  should  pay  for  them.  Under  the  declaration,  the  entire 
credit  was  originally  given  to  defendant. 

The  defendant  also  insists  that,  under  the  evidence,  which  is  all  re- 
turned in  the  record,  it  was  the  duty  of  the  trial  judge  to  have  taken 
the  case  from  the  jury,  and  decide  the  case  as  matter  of  law  in  favor 
of  defendant.  But  this  the  trial  judge  could  not  do,  if  there  was  any 
evidence  tending  to  prove  the  plaintiff's  claim.  The  testimony  of  the 
plaintiff,  however  inconsistent  with  itself,  tended,  in  some  parts  there- 
of, to  sustain  the  declaration,  and  the  effect  and  weight  to  be  given  to 
it  was  solely  a  question  for  the  jury,  and  it  would  have  been  error  in 
the  court  to  have  taken  the  case  from  them. 

The  court  instructed  the  jury  that  the  burden  of  proof  was  upon  the 
plaintiff  to  show  by  a  fair  preponderance  of  evidence  of  the  existence 
of  the  contract,  and  that  in  pursuance  of  such  contract  he  delivered 
the  goods,  relying  entirely  upon  the  promise  of  Jensen  to  pay  the  debt. 
And  if  the  jury  was  satisfied  by  a  fair  preponderance  of  evidence  that 
the  bargain  was  made  as  plaintiff  claimed,  and  that  he  relied  entirely 
upon  it  and  never  looked  to  Labonta  for  his  pay,  then  he  was  entitled 
to  recover;  otherwise  he  was  not  entitled  to  recover.  But  if  the  jury 
believed  the  theory  of  defendant,  that  no  contract  of  this  kind  was 
ever  made,  and  that  he  never  agreed  to  pay  any  sum  whatever  abso- 
lutely, he  is  net  liable  and  they  should  find  no  cause  of  action. 

The  circuit  judge  placed  the  case  very  fully  and  fairly  before  the 
jury,  and  at  the  conclusion  instructed  them  as  follows :  "The  only  ques- 
tion for  you  to  determine  is,  'Was  this  bargain  made  between  the 
plaintiff  and  defendant,  whereby  goods  were  to  be  delivered  to  Labon- 
ta upon  the  credit  of  the  defendant,  and  did  the  plaintiff,  relying  upon 
it,  deliver  the  goods  solely  upon  the  credit  of  this  man  Jensen,  and 
looking  to  no  one  else  at  all  for  his  pay?'  That  is  the  question.  If 
you  solve  that  question  in  favor  of  the  plaintiff,  then  he  is  entitled  to 
a  verdict;  if  you  solve  it  against  him,  then  he  is  not  entitled  to  a  ver- 
dict. The  plaintiff  must  have  looked  to  the  defendant,  Jensen,  from  the 
beginning  to  the  end  of  the  transaction."  There  is  no  error  in  the 
charge  of  the  court.  We  do  not  think  it  is  open  to  the  criticism  that 
"the  charge,  as  given,  assumed  that  the  evidence  made  out  an  absolute 
promise  to  pay."  On  the  contrary,  it  was  the  very  question  he  sub- 
mitted to  the  jury,  to  be  determined  by  them  from  all  the  evidence  in 
the  case. 

The  plaintiff  testified :  "Last  August  Mr,  Jensen  came  up  to  mc,  in 
Manistee,  and  made  arrangements  to  furnish  his  son-in-law  goods 
when  he  called  for  them.  The  object  that  Mr.  Jensen  wanted  goods 
for  his  son-in-law  was  because  he  was  a  roving  character,  and  he 
would  see  them  paid  for.  I  should  deliver  the  goods  to  John  Labonta. 
and  he  would  see  them  paid.  He  stated  the  object  in  wanting  the 
goods:  His  son-in-law  was  a  sailor  by  profession,  and  he  wanted  to 
settle  him  down.     He  wanted  his  daughter  to  run  the  store,  and  his 


62  REQUIRED   TO    BE   IN    WRITING 

son-in-law  to  work  around  the  mills,  if  the  store  didn't  require  his  serv- 
ices.   And  I  agreed  to  do  so." 

If  this  testimony  of  the  plaintiff  was  found  by  the  jury  to  be  true, 
the  agreement  was  not  within  the  statute  of  frauds.  The  statute  does 
not  prevent  a  person  from  buying  goods  on  his  own  credit,  to  be  de- 
livered to  another,  unless  in  writing.  In  such  case  the  important  ques- 
tion is,  to  whom  was  the  credit  given?  And  this  question  the  court 
fairly  submitted  to  the  jury.  And  the  fact  that  the  goods  are  charged 
on  the  books  of  the  seller  to  the  person  to  whom  they  were  delivered 
is  not  conclusive  that  they  were  sold  upon  his  credit.  Foster  v.  Persch, 
68  N.  Y.  400;  Hazen  v.  Bearden,  4  Sneed  (Tenn.)  48;  Walker  v. 
Richards,  41  N.  H.  388;  Swift  v.  Pierce,  13  Allen  (Mass.)  136;  Bar- 
rett V.  McHugh,  128  Mass.  165;  Champion  v.  Doty,  31  Wis.  190; 
Ruggles  V.  Gatton,  50  111.  412. 

The  plaintiff  charged  the  goods  delivered  as  follows :  "John  Labonta, 
by  order  of  Charles  Jensen."  The  plaintiff  testified  that  he  gave  credit 
to  the  defendant  when  he  let  the  goods  go,  and,  in  response  to  a  ques- 
tion put  to  him  on  cross-examination  by  defendant's  attorney,  "Who 
did  you  look  to  for  pay  for  those  goods?"  replied:  "Jensen;"  and 
that  he  did  not  look  to  Labonta  for  it.  The  court  instructed  the  jury 
that  "the  way  the  goods  are  charged  upon  the  books  does  not  exclude 
the  parties  from  showing  the  exact  fact  to  whom  the  credit  was  given." 
While  there  was  no  error  in  this  portion  of  the  charge,  we  think  the 
charge  made  upon  the  books  is  quite  as  consistent  with  the  view  that 
credit  was  originally  given  to  defendant  as  to  Labonta;  and  the  tes- 
timony received  upon  the  subject  as  to  whom  credit  was  given  was 
unexceptionable. 

There  are  no  errors  in  the  record  that  call  for  a  reversal  of  the  judg- 
ment, and  therefore  it  is  affirmed.    The  other  Justices  concurred. 


.v^^ 


NUGENT  v.  WOLFE. 


(Supreme  Court  of   Pennsylvania,  1886.     Ill   Pa.   471,   4  Atl.   15, 
56  Am.  Rep.  291.) 

Case  by  James  Nugent  against  Frank  Wolfe  to  recover  damages 
arising  from  the  breach  of  a  verbal  promise  made  by  the  defendant 
that  he  would  save  the  plaintiff  harmless  from  any  loss  occurring  to 
him  as  security  for  a  stay  of  execution.* 

Sterrett,  J.  If  the  verbal  agreement  which  plaintiff  offered  to 
prove  is  within  the  supplement  of  1855  to  the  statute  of  frauds  and 
perjuries,  there  was  no  error  in  rejecting  the  testimony,  nor  in  enter- 
ing judgment  of  nonsuit.  The  supplement  declares:  "No  action  shall 
be  brought   whereby     ♦     ♦     ♦     to   charge  the  defendant  upon   any 

*  The  statement  of  facts  is  abridged 


CONTRACTS   WITHIN   SECTION   4  63 

special  promise  to  answer  for  the  debt  or  default  of  another  unless 
the  agreement  upon  which  such  action  shall  be  brought,  or  some  mem- 
orandum or  note  thereof,  shall  be  in  writing,  and  signed  by  the  party 
to  be  charged  therewith,  or  some  other  person  by  him  authorized," 
P.  L.  308. 

Plaintiff  gave  in  evidence  the  record  of  two  judgments  in  favor  of 
the  First  National  Bank  of  Ravenna,  one  dated  January,  1876,  against 
Powers  &  Co.,  and  the  other  March,  1877,  against  himself  as  bail  for 
stay  of  execution  on  the  first-mentioned  judgment.  He  then  offered 
to  prove,  in  substance,  that  in  February,  1876,  defendant  Wolfe  re- 
quested him  to  become  bail  for  stay  of  execution,  and,  in  considera- 
tion of  his  agreeing  to  do  so,  promised  and  undertook  to  indemnify 
and  save  him  "harmless  from  any  loss  or  liability,  and  from  paying 
anything  by  reason  of  his  so  going  security ;"  that,  relying  on  said 
promise  and  undertaking  of  defendant,  he  did  become  bail  for  stay  of 
execution  on  the  judgment  against  Powers  &  Co.  This  oft'er  was  ob- 
jected to  on  the  ground  that  the  agreement  was  not  in  writing  as  re- 
quired by  the  statute,  and  the  proposed  testimony  was  excluded  by  the 
court.  In  the  same  connection  it  was  admitted  that  Powers  &  Co. 
became  insolvent;  that  plaintiff  was  compelled  to  pay  the  judgment, 
then  amounting  to  $1,499.74,  and  that  defendant,  though  often  re- 
quested, had  not  paid  any  portion  thereof.  The  question  thus  pre- 
sented is  whether  the  alleged  agreement  which  plaintiff  was  not  per- 
mitted to  prove  is  within  the  clause  of  the  supplement  above  quoted. 

The  clause  in  question  is  copied  substantially  from  the  fourth  sec- 
tion of  the  English  statute,  29  Car.  11,  c.  3,  which,  with  slight  changes 
in  phraseology,  has  been  generally  adopted  in  this  country.  During 
the  more  than  two  centuries  since  its  original  enactment  the  construc- 
tion of  this  section,  and  its  application  to  various  forms  of  contract, 
have  been  constantly  the  subject  of  contention;  and  on  no  question, 
perhaps,  has  there  been  greater  diversity  and  contrariety  of  judicial 
decision  in  this  as  well  as  in  the  parent  country.  Cases  of  real  or 
apparent  hardship  have  repeatedly  led  courts  to  put  a  strained  and 
unnatural  construction  on  what  appears  to  be  a  plain  and  easily  com- 
prehended act,  passed  for  the  purpose  of  preventing  the  commission 
of  fraud  and  perjury.  If  time  would  permit,  a  review  of  the  many 
conflicting  and  irreconcilable  decisions  that  from  time  to  time  have 
been  rendered,  and  the  refined  distinctions  upon  which  they  have  been 
based,  would  be  interesting;  but  the  undertaking  would  be  too  great, 
and  withal  not  specially  profitable. 

It  is  very  evident  the  statute  was  not  intended  to  apply  except  in 
cases  where,  in  addition  to  the  promisor  and  promisee,  there  is  also 
a  third  party  to  whose  debt  or  undertaking  the  agreement  of  the  prom- 
isor relates,  and  not  even  then  unless  the  liability  of  the  third  party 
continues.  In  other  words,  the  agreement,  to  be  within  the  purview  of 
the  statute,  must  in  a  certain  sense  be  a  collateral  and  not  an  original 
undertaking.     Independently  of  the  debt  or  liability  of  the  third  party. 


64  REQUIRED   TO    BE    IN    WRITING 

there  must,  of  course,  be  a  good  consideration  for  the  collateral  or 
subordinate  agreement ;  such,  for  example,  as  a  benefit  or  advantage 
to  the  promisor,  or  an  injury  to  the  promisee.  It  is  difficult,  if  not 
impossible,  to  formulate  a  rule  by  which  to  determine  whether  a  prom- 
ise relating  to  the  debt  or  liability  of  a  third  person  is  or  is  not  within 
the  statute;  but,  as  a  general  rule,  when  the  leading  object  of  the 
promise  or  agreement  is  to  become  guarantor  or  surety  to  the  prom- 
isee, for  a  debt  for  which  a  third  party  is  and  continues  to  be  pri- 
marily liable,  the  agreement,  whether  m^de  before  or  after,  or  at  the 
time  with  the  promise  of  the  principal,  is  within  the  statute,  and  not 
binding  unless  evidenced  by  writing.  On  the  other  hand,  when  the 
leading  object  of  the  promisor  is  to  subserve  some  interest  or  purpose 
of  his  own,  notwithstanding  the  effect  is  to  pay  or  discharge  the  debt 
of  another,  his  promise  is  not  within  the  statute. 

As  was  said  by  Mr.  Justice  Strong  in  Maule  v.  Bucknell,  50  Pa.  39, 
52 :  "It  is  undoubtedly  true  that  a  promise  to  answer  for  the  debt  or 
default  of  another  is  not  within  the  statute,  unless  it  be  collateral  to  a 
continued  liability  of  the  original  debtor.  If  it  be  a  substitute,  an 
agreement  by  which  the  debt  of  another  is  extinguished,  as  where  the 
creditor  gives  up  his  claim  on  his  original  debtor,  and  accepts  the  new 
promise  in  lieu  thereof,  it  need  not  be  in  writing.  And,  as  the  cases 
referred  to  show,  it  may  be  unaffected  by  the  statute;  though  the 
original  debt  remains,  if  the  promisor  has  received  a  fund  pledged, 
set  apart,  or  held  for  payment  of  the  debt.  But,  except  in  such  cases, 
and  others,  perhaps,  of  a  kindred  nature,  in  which  the  contract  shows 
an  intention  of  the  parties  that  the  new  promisor  shall  become  the 
principal  debtor,  and  the  old  debtor  become  but  secondarily  liable,  the 
rule,  it  is  believed,  may  be  safely  stated  that  while  the  old  debt  remains 
the  new  must  be  regarded  as  not  an  original  undertaking,  and  there- 
fore within  the  statute.  At  least,  this  may  be  stated  as  a  principle 
generally  accurate.  In  Wms.  Saund.  211,  note,  it  is  said:  'The 
question  whether  each  particular  case  comes  within  the  clause  of  the 
statute  or  not  depends,  not  on  the  consideration  for  the  promise,  but 
on  the  fact  of  the  original  party  remaining  liable,  coupled  with  the 
absence  of  any  liability  on  the  part  of  the  defendant  or  his  property, 
except  such  as  arises  from  his  express  promise.'  " 

If  one  says  to  another,  "Deliver  goods  to  A.,  and  I  will  pay  you," 
the  verbal  promise  is  binding,  because  A.,  though  he  receives  the  goods, 
is  not  responsible  to  the  party  who  furnishes  them.  But  if,  instead  of 
saying,  "I  will  pay  you,"  he  says,  "I  will  see  you  paid,"  or  "I  will  pay 
you  if  he  does  not,"  or  uses  words  equivalent  thereto,  showing  that 
the  debt  is  in  the  first  instance  the  debt  of  A.,  the  undertaking  is  col- 
lateral, and  not  valid  unless  in  writing.  In  these  latter  cases,  the 
same  consideration,  viz.,  the  consideration  of  the  promise  of  the  prin- 
cipal, is  a  good  consideration  for  the  promise  of  the  surety  or  collat- 
eral promisor.  The  credit  is  given  as  well  upon  the  original  consider- 
ation of  the  principal  as  the  collateral  promise  of  the  surety,  and  is 


CONTRACTS   WITHIN   SECTION  4  65 

a  good  consideration  for  both.  Nelson  v.  Boynton,  3  Mete.  (Mass.) 
396,  400,  Z7  Am.  Dec.  148.  Other  applications  of  the  principles  above 
stated  might  be  suggested,  but  it  is  unnecessary  to  do  so. 

In  the  case  before  us  the  only  consideration  for  the  alleged  agree- 
ment, disclosed  by  plaintiff's  offer,  is  the  disadvantage  to  him — the  risk 
he  incurred — by  becoming  bail  for  "stay  of  execution  on  the  judgment 
against  Powers  &  Co.  If  they  failed  to  pay  their  debt,  then  in  judg- 
ment, at  the  expiration  of  the  stay,  he  thereupon  became  fixed  for  the 
amount  thereof.  In  consideration  of  the  risk  or  contingent  liability 
thus  assumed  by  plaintiff  at  defendant's  request,  the  latter  promised 
and  agreed  to  pay  the  judgment,  or  see  that  it  was  paid  by  Powers  & 
Co.,  and  thus  save  plaintiff  from  the  necessity  of  paying  the  same; 
in  other  words,  defendant  specially  promised,  for  a  good  and  valid 
consideration,  to  answer  for  the  default  of  Powers  &  Co.  in  not  pay- 
ing the  judgment  at  expiration  of  the  stay.  Such  is  the  nature  and 
character  of  the  agreement  on  which  plaintiff  claimed  to  recover ;  and 
it  appears  to  come  within  the  letter  as  well  as  the  spirit  of  the  clause 
under  consideration.  If  it  is  not  an  agreement  to  answer  for  the 
debt  or  default  of  Powers  &  Co.,  it  would  be  difficult  to  say  what  it  is. 
Their  liability  to  the  bank  still  remained.  The  only  consideration 
moving  between  the  promisor  and  promisee,  as  claimed  by  the  latter, 
is  the  risk  he  incurred  in  becoming  bail  for  Powers  &  Co.  There  is 
no  testimony,  nor  was  any  offered,  to  show  that  defendant  had  any 
personal  interest  in  the  judgment  on  which  bail  was  entered,  or  that 
he  held  property  or  funds  that  should  have  been  applied  to  the  pay- 
ment thereof.  So  far  as  appears,  it  was  the  proper  debt  of  Powers 
&  Co.,  and  the  substance  of  defendant's  agreement  is  that  he  would 
see  that  they  paid  it ;  and,  if  they  failed  to  do  so,  he  would  pay  it  for 
them.  It  was  literally  a  promise  to  answer  for  the  default  of  Powers 
&  Co.  Plaintiff's  liability  as  bail  for  stay  was  merely  collateral  to  the 
debt  in  judgment,  and  had  in  contemplation  nothing  but  the  payment 
thereof  to  the  bank. 

Without  pursuing  the  subject  further,  we  are  satisfied  the  alleged 
promise  of  defendant  is  within  the  statute,  and  cannot  be  enforced 
because  it  is  not  in  writing.  Our  own  cases  are  in  accord  with  this 
view.  Allshouse  v.  Ramsay,  6  Whart.  331,  Z7  Am.  Dec.  417;  Shoe- 
maker V.  King,  40  Pa.  107;  Miller  v.  Long,  45  Pa.  350;  Maule  v. 
Bucknell,  supra;  Townsend  v.  Long,  17  Pa.  143,  18  Am.  Rep.  438. 
The  object  of  the  statute  is  protection  against  "fraudulent  practices 
commonly  endeavored  to  be  upheld  by  perjury,"  and  it  should  be 
enforced  according  to  its  true  intent  and  meaning,  notwithstanding 
cases  of  great  hardship  may  result  therefrom.  There  never  was  a 
time  in  the  history  of  our  jurisprudence  when  the  necessity  for  such 
a  statute  was  greater  than  now,  when  persons  in  interest,  as  well  as 
parties  to  the  record,  are  generally  competent  witnesses.  Judgment 
affirmed. 

TllBOCKM.CoNT. — 5 


66  EEQUIRED   TO    BE    IN    WRITING 


3.  Agreement  in  Consideration  oe  Marriage 


HUNT  V.  MUNT  et  al. 

(Court  of  Appeals  of  New  York,  1002.     171  N.  Y.  396,  64  N.  E.  159, 
59  L.  R.  A.  306.) 

Suit  by  Lena  E.  Hunt  against  Joseph  T.  Hunt  and  another,  as  ex- 
ecutors of  Wilson  G.  Hunt,  deceased.  From  a  judgment  of  the  appel- 
late division  of  the  supreme  court  (66  N.  Y.  Supp.  957)  affirming  a 
judgment  in  favor  of  the  defendants,  the  plaintiff  appeals.^     *     *     » 

Werner,  J.  This  action  was  brought  to  compel  the  specific  per- 
formance of  an  oral  antenuptial  contract  which  was  entered  into  be- 
tween the  plaintiff  and  Wilson  G.  Hunt,  the  testator  of  the  defend- 
ants, prior  to  their  intermarriage  in  October,  1896.  Under  said  con- 
tract, and  in  consideration  of  plaintiff's  promise  to  marry  said  Wilson 
G.  Hunt,  the  latter  orally  agreed  to  give  the  former  at  once  the  sum 
of  $5,000  in  money,  the  further  sum  of  $2.50  per  week,  the  income  of 
a  house  and  lot  in  the  city  of  Geneva,  N.  Y.,  to  convey  to  her  another 
house  and  lot  in  the  same  city,  and  to  make  a  will  giving  her  all  of 
his  property  except  a  watch  and  $200.  The  making  of  this  contract, 
the  subsequent  intermarriage  of  the  parties  thereto,  and  the  still  later 
breach  of  the  agreement  by  said  Wilson  G.  Hunt,  are  established  by 
the  findings  of  the  learned  trial  court,  and  upon  these  findings  it 
based  the  conclusion  of  law  that  plaintiff  is  not  entitled  to  recover  be- 
cause said  contract  is  void  under  the  statute  of  frauds. 

Under  the  unanimous  affirmance  of  the  learned  appellate  division 
the  only  question  brought  to  this  court  by  the  appellant  is  whether  a 
parol  antenuptial  contract,  founded  upon  no  other  consideration  than 
marriage,  can  be  specifically  enforced  in  a  court  of  equity.  The  stat- 
ute provides  that  "every  agreement  or  undertaking  made  upon  consid- 
eration of  marriage,  except  mutual  promises  to  marry,"  shall  be  void 
unless  such  agreement  or  undertaking,  or  some  note  or  memorandum 
thereof,  be  in  writing,  and  subscribed  by  the  party  to  be  charged 
therewith,  or  his  agent.  2  Rev.  St.  pp.  135,  136,  c.  7,  tit.  2,  §§  2,  8. 
The  learned  counsel  for  the  appellant  concedes  that  the  contract  in 
suit  falls  within  the  scope  of  this  broad  statute,  but  argues  that  the 
intermarriage  of  the  parties  to  the  contract  is  such  a  part  performance 
thereof  as  to  invest  a  court  of  equity  with  the  power  of  specific  en- 
forcement. The  argument  for  the  respondents  may  be  compressed 
into  the  single  statement  that  the  same  act  of  performance  which 
brings  the  contract  within  the  sweep  of  the  statute  cannot  be  relied 
upon  to  exclude  it  therefrom. 

B  The  statement  of  facts  is  abridged. 


CONTRACTS   WITHIN   SECTION   4  67 

The  most  notable  feature  of  the  statute  above  quoted  is  its  sim- 
plicity and  directness  of  language.  All  contracts  founded  upon  con- 
sideration of  marriage,  except  mutual  promises  to  marry,  shall  be  void 
unless  the  commands  of  the  statute  are  obeyed.  Mutual  executory 
promises  to  marry  are  expressly  excluded  from  its  operation.  All 
other  contracts  founded  upon  consideration  of  marriage  are  as  clearly 
within  its  terms.  These  two  divers  provisions  of  the  statute,  stand- 
ing in  juxtaposition  to  each  other,  so  plainly  disclose  the  legislative 
intent  as  to  render  construction  unnecessary,  if  not  impossible.  The 
letter  of  the  law  bears  its  own  interpretation.  This  view  of  the  stat- 
ute is  not  original. 

Pomeroy,  in  his  work  on  Contracts,  under  the  head  of  "Specific 
Performance"  (2d  Ed.  §  111),  states  it  most  forcibly  as  follows: 
"When  a  verbal  contract  is  made  in  relation  to  or  upon  the  consider- 
ation of  marriage,  the  marriage  alone  is  not  a  part  performance  upon 
which  to  decree  specific  execution.  This  rule,  which  is  firmly  estab- 
lished, is  based  upon  the  express  language  of  the  statute.  A  promise 
made  in  anticipation  of  a  marriage,  followed  by  a  marriage,  is  the  ex- 
act case  contemplated  by  the  statute.  It  is  plain  that  the  marriage 
adds  nothing  to  the  very  circumstances  described  by  the  statutory 
provision  which  makes  a  writing  essential.  In  fact,  until  a  marriage 
takes  place,  there  is  no  binding  agreement  independent  of  the  statute, 
so  that  the  marriage  itself  is  a  necessary  part  of  every  agreement  made 
upon  consideration  of  it,  which  the  legislature  has  said  must  be  in 
writing." 

Beach,  in  his  Modern  Equity  Jurisprudence  (section  622),  says: 
"It  is  well  settled  that  marriage  is  not  an  act  of  part  performance 
vyhich  will  take  a  parol  contract  out  of  the  statute,  for  the  statute  ex- 
pressly provides  that  a  contract  in  consideration  of  marriage  shall  not 
be  binding  unless  it  is  in  writing." 

This  is  also  the  view  of  the  statute  entertained  by  the  courts  of 
England  and  the  courts  in  other  jurisdictions  where  the  English  stat- 
ute of  frauds  has  been  copied.  Caton  v.  Caton,  L.  R.  2  H.  L.  127, 
affirming  1  Ch.  App.  137;  Taylor  v.  Beech,  1  Ves.  Sr.  297;  Dundas 
V.  Dutens,  1  Ves.  Jr.  196;  Lassence  v.  Tierney,  1  Macn.  &  G.  551; 
Warden  v.  Jones,  23  Beav.  487 ;  Peek  v.  Peek,  77  Cal.  106,  19  Pac. 
227,  1  L.  R.  A.  185,  11  Am.  St.  Rep.  244;  Bradley  v.  Saddler,  54  Ga. 
681;  McAnnulty  v.  McAnnulty,  120  111.  26,  11  N.  E.  397,  60  Am. 
Rep.  552;   Henry  v.  Henry,  27  Ohio  St.  121. 

In  our  own  state  the  trend  of  the  decisions  is  in  the  same  direction. 
In  Brown  v.  Conger,  8  Hun,  625,  it  was  held  that  equity  cannot  en- 
force a  parol  contract  for  the  conveyance  of  lands  made  in  consider- 
ation of  a  marriage  subsequently  consummated.  In  Dygert  v.  Rcnier- 
schnider,  32  N.  Y.  629,  this  court  enforced,  as  against  the  creditors  of 
the  husband,  an  oral  antenuptial  contract  under  which  the  latter  con- 
veyed lands  to  his  wife;  but  the  decision  was  based  upon  the  distinct 
ground  that  the  payment  by  the  wife  of  some  of  the  husband's  debts 


68  REQUIRED  TO   BE   IN   WRITING 

created  an  independent  consideration  for  the  transfer,  and  in  his  dis- 
cussion of  that  fact  Judge  Davies  said:  "Under  the  authorities,  1 
think  she  [the  wife]  had  no  right,  based  solely  upon  the  consideration 
of  marriage,  which  courts,  either  of  law  or  equity,  could  have  en- 
forced." To  the  same  effect  are  Lamb  v.  Lamb,  18  App.  Div.  250, 
46  N.  Y.  Supp.  219;  Ennis  v.  Ennis,  48  Hun,  11;  Whyte  v.  Denike, 
53  App.  Div.  320,  65  N.  Y.  Supp.  577 ;  Reade  v.  Livingston,  3  Johns. 
Ch.  481,  8  Am.  Dec.  520;  Borst  v.  Corey,  16  Barb.  136;  and  In  re 
VVilloughby,  11  Paige,  257. 

In  none  of  these  cases,  except  Brown  v.  Conger,  supra,  was  the 
question  presented  in  precisely  the  same  form  as  in  the  case  at  bar, 
but  in  all  of  them  the  validity  of  a  parol  antenuptial  contract  was  a 
pertinent  and  underlying  question,  upon  which  the  courts  have  held 
with  unvarying  uniformity  that  marriage  is  not  such  a  part  perform- 
ance of  a  parol  antenuptial  contract  as  to  take  it  out  of  the  operation 
of  the  statute  of  frauds. 

Counsel  for  the  appellant  vigorously  contends  that  in  the  case  at 
bar  the  statute  of  frauds  is  being  used  by  the  respondents  as  an  in- 
strument of  fraud,  and  that  this  is  a  consummation  that  equity  never 
tolerates.  In  support  of  this  position  we  are  referred  to  such  cases 
as  Freeman  v.  Freeman,  43  N.  Y.  34,  3  Am.  Rep.  657;  Winchell  v. 
Winchell,  100  N.  Y.  159,  2  N.  E.  897;  Winne  v.  Winne,  166  N.  Y. 
263,  59  N.  E.  832,  82  Am.  St.  Rep.  647;  Ahrens  v.  Jones,  169  N. 
Y.  555,  62  N.  E.  666,  88  Am.  St.  Rep.  620;  Goldsmith  v.  Gold- 
smith, 145  N.  Y.  313,  39  N.  E.  1067;  Dunckel  v.  Dunckel,  141  N.  Y. 
427,  36  N.  E.  405 ;  and  other  cases  in  which  equity  has  intervened  to 
prevent  the  perpetration  of  fraud  in  the  name  of  the  statute.  There 
is  no  analogy  between  such  cases  and  the  case  at  bar.  Courts  of 
equity,  in  exercising  their  powers  upon  the  statute  of  frauds,  are 
bound  by  two  important  limitations.  The  first  is  that  equity  will 
never  interfere  where  there  is  an  adequate  remedy  at  law  (Russell  v. 
Briggs,  165  N.  Y.  500,  59  N.  E.  303,  53  L.  R.  A.  556),  and  the  sec- 
ond is  that  equity  cannot  repeal  the  statute  (Dung  v.  Parker,  52  N. 
Y.  494). 

The  first  of  these  limitations  has,  of  course,  no  application  to  the 
case  at  bar,  because  the  appellant  is  clearly  without  a  remedy  at  law. 
The  second  of  these  limitations  is  applicable  here,  for  the  reason  that 
the  statute  must  be  repealed  before  the  contract  in  suit  can  be  en- 
forced. It  is  just  here  that  we  observe  the  essential  difference  be- 
tween this  case  and  those  upon  which  the  appellant  relies.  In  the 
latter  class  of  cases  equity  intervenes  because  the  language  of  the 
statute  is  so  general  and  elastic  as  to  compel,  or  at  least  permit,  the 
presumption  that  it  was  not  designed  to  operate  as  a  shield  for  fraud. 
In  cases  like  the  one  at  bar  the  language  of  the  statute  is  so  specific 
and  rigid  that  no  presumption  can  be  invoked  that  conflicts  with  the 
letter  of  the  law,  although  in  certain  cases  great  injustice  may  ensue. 

Counsel  for  the  appellant  also  insists  that  there  was  evidence  tend- 


CONTRACTS   WITHIN   SECTION  4  69 

ing  to  show  that  Wilson  G.  Hunt  made  a  will  in  pursuance  of  the  an- 
tenuptial contract  and  in  conformity  with  its  terms,  and  that  this  fact 
of  itself  establishes  such  a  part  performance  of  the  contract  as  to 
take  it  out  of  the  statute.  We  cannot  discuss  this  question  upon  the 
merits,  because  the  trial  court  has  made  no  finding  upon  the  subject. 
We  have  no  right  to  amplify  the  findings  of  fact  in  order  to  make  a 
sufficient  ground  for  reversal.  Hilton  v.  Ernst,  161  N.  Y.  227,  55 
N.  E.  1056. 

The  judgment  herein  should  be  afifirmed,  with  costs.    Judgment  af- 
firmed. 


4.  Contract  OR  Sai,e  o?  Lands,  or  Any  Interest  in  or  Concern- 
ing Them 


GREEN  V.  ARMSTRONG. 

(Supreme  Court  of  New  Jork,  1S45.     1  Denio,  550.) 

Beardsley,  J.*  A  verbal  contract  was  made  between  these  parties, 
by  which  the  defendant  agreed  to  sell  certain  trees  then  standing  and 
growing  on  his  land,  to  the  plaintiff,  with  liberty  to  cut  and  remove 
the  same  at  any  time  within  twenty  years  from  the  making  of  the 
contract.  A  part  of  the  trees  were  cut  and  removed  under  this  agree- 
ment, but  the  defendant  then  refused  to  permit  any  more  to  be  taken, 
and  for  this  the  plaintiff  brought  his  action  in  the  justice's  court,  where 
a  judgment  was  rendered  in  his  favor.  On  the  trial  of  the  cause  the 
defendant  objected  to  proof  of  such  parol  contract,  but  the  objection 
was  overruled.  The  judgment  was  removed  by  certiorari  to  the  court 
of  common  pleas  of  Oneida  county,  and  was  reversed  by  that  court,  on 
the  ground,  as  the  record  states,  that  the  contract,  not  being  in  writing, 
was  void  by  the  statute  of  frauds.     *     ♦     * 

The  Revised  Statutes  declare  that  no  "interest  in  lands"  shall  be 
created,  unless  by  deed  or  conveyance  in  writing;  and  that  every  con- 
tract for  the  sale  of  "any  interest  in  lands"  shall  be  void  unless  in 
writing.  2  Rev.  St.  134,  §§  6,  8.  Certain  exceptions  and  qualifications 
to  these  enactments  are  contained  in  the  sections  referred  to,  but  none 
which  touch  the  question  now  before  the  court:  and  so  far  as  respects 
this  question  the  former  statute  of  New- York,  and  the  English  statute 
of  29  Car.  II.  c.  3,  contain  similar  provisions.  1  R.  L.  1813,  p.  78; 
Chit.  Cont.  299. 

The  precise  question  in  this  case  is,  whether  an  agreement  for  the 
Bale  of  growing  trees,  with  a  right  to  enter  on  the  landl  at  a  future 
time  and  remove  them,  is  a  contract  for  the  sale  of  an  interest  in  land, 

«  The  statement  of  facts  and  a  portion  of  tlie  opinion  aro  omitted. 


70  REQUIRED   TO    BE    IN    WRITING 

If  it  is,  it  must  follow  that  the  one  declared  on  in  this  case,  not  being 
in  writing,  was  invalid,  and  the  judgment  of  the  common  pleas,  re- 
versing that  of  the  justice,  was  correct  and  must  be  affirmed. 

And  in  the  outset  I  must  observe,  that  this  question  has  not,  to  my 
knowledge,  been  decided  in  this  state.  It  has,  however,  arisen  in  the 
English  courts,  and  in  some  of  those  of  our  sister  states;  but  their 
decisions  are  contradictory,  and  the  views  of  individual  judges  wholly 
irreconcilable  with  each  other.  Greenl.  Ev.  (2d  Ed.)  §  271,  and  notes; 
Chit.  Cont.  299-302 ;  4  Kent,  Comm.  (5th  Ed.)  450,  451.  We  are,  there- 
fore, as  it  seems  to  me,  at  full  liberty  to  adopt  a  broad  principle,  if 
one  can  be  found,  which  will  determine  this  precise  question  in  a  man- 
ner which  our  judgments  shall  approve,  and  especially  if  it  be  equally 
applicable  to  other  and  analogous   cases. 

By  the  statute,  a -contract  for  the  sale  of  "any  interest  in  lands"  is 
void  unless  in  writing.  The  word  land  is  comprehensive  in  its  import, 
and  includes  many  things  besides  the  earth  we  tread  on,  as  waters, 
grass,  stones,  buildings,  fences,  trees  and  the  like ;  for  all  these  may 
be  conveyed  by  the  general  designation  of  land.  1  Shep.  Touch,  (by 
Preston),' 91 ;  1  Inst.  4;  1  Preston,  Est.  8;  2  Bl.  Comm.  17,  18;  1 
Rev.  St.  387,  §  2 ;  2  Rev.  St.  137,  §  6.  Standing  trees  are  therefore 
part  and  parcel  of  the  land  in  which  they  are  rooted,  and  as  such  are 
real  property.  They  pass  to  the  heir  by  descent  as  part  of  the  inher- 
itance, and  not,  as  personal  chattels  do,  to  the  executor  or  administra- 
tor. Toller,  Ex'rs,  193-195 ;  2  Bl.  Comm.  (by  Chitty)  122,  note ;  Rob. 
Frauds,  365,  366;  Liford's  Case,  11  Coke,  46;  Com.  Dig.  "Biens," 
(H).  And  being  strictly  real  property,  they  cannot  be  sold  on  an  execu- 
tion against  chattels  only.  Scorell  v.  Boxall,  1  Younge  &  J.  396 ;  Ev- 
ans v.  Roberts,  5  Barn.  &  C.  829. 

It  is  otherwise  with  growing  crops,  as  wheat  and  corn,  the  annual 
produce  of  labor  and  cultivation  of  the  earth ;  for  these  are  personal 
chattels,  and  pass  to  those  entitled  to  the  personal  estate,  and  not  to 
the  heir.  Toller,  150,  194;  2  Bl.  Comm.  404.  They  may  also  be  sold 
on  execution  like  other  personal  chattels.  Whipple  v.  Foot,  2  Johns. 
418,  3  Am.  Dec.  442;  Jones  v.  Flint,  10  Adol.  &  E.  753;  Peacock  v. 
Purvis,  2  Brod.  &  B.  362 ;  Hartwell  v.  Bissell,  17  Johns.  128. 

These  principles  suggest  the  proper  distinction.  An  interest  in  per- 
sonal chattels  may  be  created  without  a  deed  or  conveyance  in  writ- 
ing, and  a  contract  for  their  sale  may  be  valid  although  by  parol.  But 
an  interest  in  that  which  is  land,  can  only  be  created  by  deed  or  written 
conveyance :  and  no  contract  for  the  sale  of  such  an  interest  is  valid 
unless  in  writing.  It  is  not  material  and  does  not  affect  the  principle^ 
that  the  subject  of  the  sale  will  be  personal  property  when  transferredj_ 
to  the  purchaser.    Ifr  when_sold^JUs^,_i5Lthe_ha^ 

of  the  land  itself,  the  contract  is  within  the  statute.    These  trees  were_ 
part  of  the  defendant's  land  and  not  his  personal  chattels.    The  con:_ 
tract  for  their  sale  and  transfer,  being  by  parol,  was  therefore  void. 
The  opinion  of  the  court  in  the  case  of  Dunne  v.  Ferguson,  1  Hayes, 


CONTRACTS   WITHIN  SECTION  4  71 

542,  contains  one  of  the  best  illustrations  of  this  question.  That  case 
is  thus  stated  in  Steph.  N.  P.  1971 :  "The  facts  of  the  case  were,  that 
in  October,  1830,  the  defendant  sold  to  the  plaintiff  a  crop  of  turnips, 
which  he  had  sown  a  short  time  previously,  for  a  sum  less  than  ten 
pounds.  In  February,  1831,  and  previously,  while  the  turnips  were 
still  in  the  ground,  the  defendant  severed  and  carried  away  consider- 
able quantities  of  them,  which  he  converted  to  his  own  use.  No  note 
in  writing  was  made  of  the  bargain.  It  was  contended  for  the  de- 
fendant, that  the  action  of  trover  did  not  lie  for  things  annexed  to 
the  freehold,  and  that  the  contract  was  of  no  validity  for  want  of  a 
note  or  memorandum  in  writing  pursuant  to  the  statute  of  frauds. 
Upon  the  foregoing  facts  Chief  Baron  Joy  observed  (Barons  Smith, 
Pennef eather  and  Foster,  concurring) :  'The  general  question  for  our 
decision  is,  whether  there  has  been  a  contract  for  an  interest  concern- 
ing lands,  within  the  second  section  of  the  statute  of  frauds?  or  wheth- 
er it  merely  concerned  goods  and  chattels?  And  that  question  resolves 
itself  into  another,  whether  or  not  a  growing  crop  is  goods  and  chat- 
tels ?  In  one  case  it  has  been  held,  that  a  contract  for  potatoes  did  not 
require  a  note  in  writing,  because  the  potatoes  were  ripe :  and  in  an- 
other case,  the  distinction  turned  upon  the  hand  that  was  to  dig  them, 
so  that  if  dug  by  A.  B.  they  were  potatoes,  and  if  by  C.  D.  they  were 
an  interest  in  lands.  Such  a  course  always  involves  the  judge  in  per- 
plexity, and  the  case  in  obscurity.  Another  criterion  must,  therefore, 
be  had  recourse  to;  and,  fortunately,  the  later  cases  have  rested  the 
matter  on  a  more  rational  and  solid  foundation.  At  common  law, 
growing  crops  were  uniformly  held  to  be  goods;  and  they  were  sub- 
ject to  all  the  leading  consequences  of  being  goods,  as  seizure  in  exe- 
cution, &c.  The  statute  of  frauds  takes  things  as  it  finds  them,  and 
provides  for  lands  and  goods  according  as  they  were  so  esteemed  be- 
fore its  enactment.  In  this  way  the  question  may  be  satisfactorily  de- 
cided. If,  before  the  statute,  a  growing  crop  has  been  held  to  be  an 
interest  in  lands,  it  would  come  within  the  second  section  of  the  act, 
but  if  it  were  only  goods  and  chattels,  then  it  came  within  the  thir- 
teenth section.  On  this,  the  only  rational  ground,  the  cases  of  Evans 
V.  Roberts,  5  Barn.  &  C.  829;  Smith  v.  Surman,  9  Bam.  &  C.  561 ; 
and  Scorell  v.  Boxall,  1  Younge  &  J.  396, — have  been  decided.  And  as 
we  think  that  growing  crops  have  all  the  consequences  of  chattels, 
and  are  like  them,  liable  to  be  taken  in  execution,  we  must  rule  the 
points  saved  for  the  plaintiff.'  " 

Various  other  decisions  have  proceeded  on  the  same  principle,  al- 
though it  has  nowhere  been  stated  and  illustrated  with  the  same  clear- 
ness and  force  as  in  the  opinion  of  Chief  Baron  Joy. 

The  following  cases  may  be  cited  to  show  that  growing  crops  of 
grain  and  vegetables,  fructus  industrials,  being  goods  and  chattels,  and 
not  real  estate,  may  be  conveyed  by  a.  verbal  contract,  as  they  may  also 
be  sold  on  execution  as  personal  chattels.  Carrington  v.  Roots,  2  Mccs. 
&  W.  248;    Sainsbury  v.  Matthews,  4  Mees.  &  W.  343;    Randall  v. 


72  REQUIRED  TO   BE   IN   WRITING 

Ramer,  2  Johns.  421,  note;  Mumford  v.  Whitney,  15  Wend.  387,  30 
Am.  Dec.  60 ;  Austin  v.  Sawyer,  9  Cow.  39 ;  Jones  v.  Flint,  10  Adol. 
&  E.  753 ;  Warwick  v.  Bruce,  2  Maule  &  S.  205 ;  Graves  v.  W^eld,  5 
Barn.  &  Adbl.  105. 

But  where  tli^  subject  matter  of  a  contract  of  sale,  is  growmg  trees, 
fruit  or  grass,  the  natural  produce  of  the  earth,  and  not  annual  pro- 
ductions raised  by  manurance  and  the  industry  of  man,  as  they  are 
parcel  of  the  land  itself,  and  not  chattels,  the  contract,  in  order  to  be 
valid  must  be  in  writing.  Teal  v.  Auty,  2  Brod.  &  B.  99;  Putney  v. 
Day,  6  N.  H.  430,  25  Am.  Dec.  470;  Olmstead  v.  Niles,  7  N.  H.  522; 
Crosby  v.  Wadsworth,  6  East,  602 ;  Rodwell  v.  PhilHps,  9  Mees.  & 
W.  501 ;   Jones  v.  Flint,  10  Adol.  &  E.  753. 

The  contract  in  this  case  was  within  the  statute,  and  being  by  parol 
was  void.  The  judgment  of, the  common  pleas  must  be  affirmed.  Judg- 
ment affirmed. 


5.  Agreement  Not  to  be  PERroRMED  Within  One  Year 


DOYLE  V.  DIXON. 

(Supreme  Judicial   Court  of  Massachusetts,   1867.     97   Mass.   208, 
93  Am.  Dec.  SO.) 

Action  by  John  Doyle  against  John  Dixon  for  breach  of  a  contract 
by  which  the  defendant,  on  selling  his  stock  of  groceries  and  good 
will  to  the  plaintiff,  agreed  not  to  go  into  the  grocery  business  in  Chico- 
pee  for  a  period  of  five  years.  The  defendant  contended  that  the 
agreement  was  within  the  statute  of  frauds  as  an  agreement  not  to 
be  performed  within  a  year,  and  that,  as  it  was  not  in  writing,  the 
plaintiff  could  not  recover;  but  the  judge  ruled  the  contrary.  There 
was  a  verdict  for  the  plaintiff,  and  the  defendant  excepted. 

Gray,  J.'^  It  is  well  settled  that  an  oral  agreement  which  according 
to  the  expression  and  contemplation  of  the  parties  may  or  may  no^ 
be  fully  performed  within  a  year  is  not  within  that  clause  of  the  statute 
of  frauds,  which  requires  any  "agreement  not  to  be  performed  within 
one  year  from  the  making  thereof"  to  be  in  writing  in  order  to  main- 
tain an  action.  An  agreement  therefore  which  will  be  completely 
performed  according  to  its  terms  and  intention  if  either  party  should 
die  within  the  year  is  not  within  the  statute.  Thus  in  Peters  v.  West- 
borough,  19  Pick.  364,  31  Am.  Dec.  142,  it  was  held  that  an  agreement 
to  support  a  child  until  a  certain  age  at  which  the  child  would  not  ar- 
rive for  several  years  was  not  within  the  statute,  because  it  depended 

7  The  statement  of  the  facts  is  abridged  and  a  portion  of  the  opinion  is 
omitted. 


CONTRACTS   WITHIN  SECTION  4  73 

upon  the  contingency  of  the  child's  Hfe,  and,  if  the  child  should  die 
within  one  year,  would  be  fully  performed. 

On  the  other  hand,  if  the  agreement  cannot  be  completely  performed 
within  a  year,  the  fact  that  it  may  be  terminated,  or  further  perform- 
ance excused  or  rendered  impossible,  by  the  death  of  the  promisee 
or  of  another  person  within  a  year,  is  not  sufficient  to  take  it  out  of  the 
statute.  It  was  therefore  held  in  Hill  v.  Hooper,  1  Gray,  131,  that 
an  agreement  to  employ  a  boy  for  five  years  and  to  pay  his  father 
certain  sums  at  stated  periods  during  that  time  was  within  the  statute ; 
for  although  by  the  death  of  the  boy  the  services  which  were  the  con- 
sideration of  the  promise  would  cease,  and  the  promise  therefore  be  de- 
termined!, it  would  certainly  not  be  completely  performed.  So  if  the 
death  of  the  promisor  within  the  year  would  merely  prevent  full  per- 
formance of  the  agreement,  it  is  within  the  statute;  but  if  his  death 
would  leave  the  agreement  completely  performed  and  its  purpose  fully 
carried  out,  it  is  not.  It  has  accordingly  been  repeatedly  held  by  this 
court  that  an  agreement  not  hereafter  to  carry  on  a  certain  business 
at  a  particular  place  was  not  within  the  statute,  because,  being  only 
a  personal  engagement  to  forbear  doing  certain  acts,  not  stipulating 
for  anything  beyond  the  promisor's  life,  and  imposing  no  dtities  upon' 
his  legal  representatives,  it  would  be  fully  performed  if  he  died  with- 
in the  year.  Lyon  v.  King,  11  Mete.  (Mass.)  411,  45  Am.  Dec.  219; 
Worthy  v.  Jones,  11  Gray,  168,  71  Am.  Dec.  696. 

An  agreement  not  to  engage  in  a  certain  kind  of  business  at  a  par- 
ticular place  for  a  specified  number  of  years  is  within  the  same  prin- 
ciple ;  for  whether  a  man  agrees  not  to  do  a  thing  for  his  life,  or  never 
to  do  it,  or  only  not  to  do  it  for  a  certain  number  of  years,  it  is  in 
either  form  an  agreement  by  which  he  does  not  promise  that  anything 
shall  be  done  after  his  death,  and  the  performance  of  which  is  there- 
fore completed  with  his  life.  An  agreement  to  do  a  thing  for  a  cer- 
tain time  may  perhaps  bind  the  promisor's  representatives*,  and  at  any 
rate  is  not  performed  if  he  dies  within  that  time.  But  a  mere  agree- 
ment that  he  will  himself  refrain  from  doing  a  certain  thing  is  fully 
performed  if  he  keeps  it  so  long  as  he  is  capable  of  doing  or  refrain- 
ing. The  agreement  of  the  defendant  not  to  go  into  business  again  at 
Chicopee  for  five  years  was  therefore  not  within  the  statute  of  frauds. 
♦     *     *     Exceptions  overruled. 


74  REQUIRED  TO   BE   IN   WRITING 

III.  Form  Required  * 
1.  Contents  of  Writing 


ULLSPERGER  v.  MEYER. 

(Supreme  Court  of  Illinois,  1905.     217  111.  262,  75  N.  E.  482,  2  L.  R.  A. 
[N.  S.]  221,  3  Ann.  Cas.  1032.) 

Bill  by  Anton  Ullsperger  against  Charlotte  Meyer.  From  a  decree 
of  a  dismissal,  complainant  appeals. 

Ricks,  J."  This  was  a  suit  for  specific  performance  of  a  certain 
contract  set  out  in  appellant's  bill  of  complaint,  which  is,  in  substance, 
as  follows :  It  alleges :  That  on  the  8th  day  of  January,  1905,  de- 
fendant was  seised  and  possessed,  in  fee  simple,  of  real  estate  sit- 
uated in  the  city  of  Chicago,  county  of  Cook,  and  state  of  Illinois,  de- 
scribed as  follows:  The  real  estate  and  premises  known  as  No.  1031 
Milwaukee  avenue,  which  are  otherwise  and  legally  described  as  lot 
13  in  the  subdivision  of  the  westerly  half  of  block  11,  in  McReynold's 
subdivision  of  part  of  the  E.  1/2  of  the  N.  E.  i/4  of  section  6,  township 
39  N.,  range  14  E.  of  the  3d  P.  M.  That,  being  so  seised,  on  that 
date  said  defendant  agreed  to  sell  said  premises  and  real  estate  to  the 
complainant  for  the  sum  of  $14,000,  and  the  complainant  agreed  to 
purchase  said  real  estate  and  to  pay  said  defendant  therefor  said  sum 
of  $14,000.  That  on  that  date,  to  evidence  the  sale  and  purchase,  the 
said  Charlotte  Meyer,  by  the  name  of  C.  Meyer,  executed  a  certain 
document  in  writing,  which  document  is  in  the  words  and  figures  fol- 
lowing: "Chicago,  Jan.  8,  1904.  Received  of  Anton  Ullsperger  $100 
on  said  purchase  of  the  property  No.  1031  Milwaukee  ave.,  at  the 
price  of  $14,000.    C.  Meyer." 

The  bill  further  alleges :  That  the  said  document  bears  date  Janu- 
ary 8,  1904,  but  in  fact  the  same  was  written  and  signed  by  the  de- 
fendant on  the  8th  day  of  January,  1905,  and  that  an  error  and  mis- 
take were  made  by  the  person  writing  said  document  in  stating  the 
date  as  1904,  instead  of  1905.  That  the  said  premises,  described  as 
No.  1031  Milwaukee  avenue  in  said  document  aforesaid,  are  the 
same  premises  and  real  estate  above  described  as  lot  13,  etc.,  and  in 
the  purchase  of  said  premises  aforesaid  the  complainant  intended  to 
purchase  said  lot  13,  and  said  defendant  intended  to  sell  to  the  com- 
plainant said  lot  13,  aforesaid.  That  the  complainant  has  always  been 
willing  to  comply  with  the  terms  of  the  agreement  on  his  part  to  be 
performed,  and  that  a  few  days  after  the  said  8th  day  of  January, 

«  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  44-46. 

0  A  portion  of  the  opinion  is  omitted. 


FORM   BEQUIRED  75 

1905,  complainant  applied  to  said  defendant  and  offered  to  pay  her  the 
sum  of  $13,900,  being  the  balance  then  due  to  the  defendant  under 
the  said  agreement,  on  said  defendant  delivering  to  the  complainant  a 
sufficient  deed  for  said  premises  according  to  said  agreement ;  and  the 
defendant  refused,  and  still  refuses,  to  comply  with  said  agreement  on 
her  part,  although  the  complainant  is  and  always  has  been  ready  and 
willing  to  pay  said  sum  of  $13,900  and  to  fully  perform  his  part  of 
said  agreement  whenever  the  defendant  will  make  and  deliver  to  com- 
plainant a  good  and  sufficient  deed  for  said  premises  aforesaid.  That 
the  defendant,  subsequent  to  executing  said  document  aforesaid,  in- 
formed the  complainant  that  she  would  not  accept  the  balance  of  $13,- 
900,  and  would  not  sell  and  convey  said  premises  and  real  estate  to  the 
complainant  in  accordance  with  said  agreement,  and  absolutely  refused 
to  carry  said  agreement  out. 

The  bill  makes  said  Charlotte  Meyer  a  party  defendant,  and  prays 
that  she  may  answer  said  bill  not  under  oath,  answer  under  oath  being 
waived,  and  that  the  defendant  may  be  decreed  specifically  to  perform 
the  said  agreement  entered  into  and  make  a  good  and  sufficient  deed 
of  conveyance  to  the  complainant  of  said  premises,  the  complainant 
being  ready  and  willing,  and  thereby  offering  specifically  to  perform 
said  agreement  on  his  part  upon  the  defendant  making  out  a  good 
and  sufficient  title  to  the  said  premises  and  executing  a  proper  con- 
veyance thereof  to  the  complainant  pursuant  to  the  terms  of  said 
agreement,  and  to  pay  the  defendant  the  residue  of  said  purchase 
money,  and  for  general  relief.  To  the  bill  general  and  special  de- 
murrers were  filed,  and  the  demurrers  were  sustained,  and  a  decree 
was  accordingly  entered  dismissing  the  bill  for  want  of  equity;  and 
this  appeal  is  prosecuted  to  review  that  decree. 

The  principal  question  presented  for  our  consideration  is  whether 
or  not  the  memorandum  of  writing  entered  into  was  sufficient  to  take 
the  contract  out  of  the  statute  of  frauds  and  perjuries.  The  statute 
of  frauds  and  perjuries  (Hurd's  Rev.  1903,  p.  995,  c.  59)  reads: 

"Sec.  2.  No  action  shall  be  brought  to  charge  any  person  upon  any 
contract  for  the  sale  of  lands,  tenements  or  hereditaments  or  any  in- 
terest in  or  concerning  them,  for  a  longer  term  than  one  year,  unless 
such  contract  or  some  memorandum  or  note  thereof  shall  be  in  writ- 
ing, and  signed  by  the  party  to  be  charged  therewith,  or  some  other 
person  thereunto  by  him  lawfully  authorized  in  writing,  signed  by 
such  party." 

Section  3  of  the  same  chapter  reads :  "The  consideration  of  any 
such  promise  or  agreement  need  not  be  set  forth  or  expressed  in  the 
writing,  but  may  be  proved  or  disproved  by  parol  or  other  legal  ev- 
idence." 

From  the  reading  of  the  above  sections  of  the  statute  it  will  be  seen 
that  it  is  only  necessary  that  some  memorandum  or  note  be  made  of 
the  contract  and  signed  by  the  party  to  be  charged  therewith.  "The 
statute  does  not  require  that  the  contract  itself  siiall  be  reduced  to 


76  REQUIRED   TO    BE    IN   WRITING 

writing.  It  is  sufficient  if  there  be  a  memorandum  of  the  contract  in 
writing,  signed  by  the  party  to  be  charged  or  by  some  one  by  him  duly 
authorized.  Cossitt  v.  Hobbs,  56  111.  231;  McConnell  v.  Brillhart,  17 
111.  354,  65  Am.  Dec.  661;  Spangler  v.  Danforth,  65  111.  152;  Wood 
V.  Davis,  82  111.  311.  No  particular  form  of  language  is  necessary  to 
constitute  the  memorandum  requisite  to  satisfy  the  requirements  of 
the  statute.  An  admission  in  writing  of  the  bargain  having  been 
made,  although  it  may  not  furnish  exclusive  evidence  of  the  contract, 
as  a  final  agreement  would  do,  or  an  o-ffer  in  writing  so  stating  the 
proposal  that  its  mere  acceptance  would  fix  the  terms  of  the  bargain, 
will,  if  accepted,  satisfy  the  statute,  and  the  acceptance  of  the  offer 
in  writing  may  be  shown  by  parol.  Browne  on  Statute  of  Frauds,  § 
345a;  Esmay  v.  Gorton,  18  111.  483,  and  authorities  supra;  Farwell 
V.  Lowther,  18  111.  252."  Lasher  v.  Gardner,  124  111.  441,  16  N.  E. 
919. 

The  authorities  are  agreed  that  if  the  memorandum  shall  contain  on 
its  face  the  names  of  the  parties  vendor  and  vendee,  a  sufficiently  clear 
and  explicit  description  of  the  thing,  interest,  or  property  as  will  be 
capable  of  identification,  together  with  the  terms  and  conditions  of  the 
contract,  and  signed  by  the  party  to  be  charged,  it  will  be  sufficient 
upon  which  to  predicate  a  decree  for  specific  performance.  McCon- 
nell V.  Brillhart,  supra.  The  contract  or  memorandum  set  up  in  the 
bill,  while  in  the  nature  of  a  receipt,  clearly  evidences  a  sale  of  the 
property  therein  described  as  having  taken  place  from  appellee  to  ap- 
pellant, and  acknowledges  that  $100  has  been  paid  upon  the  purchase 
price  of  $14,000  by  appellant.  Appellant  is  named  as  the  purchaser, 
and  the  text  of  the  writing  clearly  designates  appellee  as  the  vendor 
by  whom  the  writing  is  signed;  so  that  it  will  be  seen  that  the  con- 
tract or  writing  relied  upon  contains  all  that  is  required  by  the  stat- 
ute, and  more,  as  the  statute  does  not  require  that  the  consideration 
shall  be  stated  in  the  writing  but  authorizes  it  to  be  established  by 
parol. 

It  is  insisted  that  there  is  no  time  specified  for  the  completion  of 
the  contract,  and  that  therefore  the  contract  is  not  complete.  Under 
such  a  contract  the  law  would  imply  that  it  was  to  be  performed  with- 
in a  reasonable  time  after  entering  into  the  same,  and  what  would  be 
a  reasonable  time  would  be  a  matter  of  proof  under  all  the  conditions 
and  circumstances  that  might  surround  the  case.  Gibson  v.  Brown, 
214  111.  330,  IZ  N.  E.  578;  Driver  v.  Ford,  90  111.  595;  Hamilton  v. 
Scully,  118  111.  192,  8  N.  E.  767;  Biddison  v.  Johnson,  50  111.  App. 
173.  Time  was  not  made  the  essence  of  the  contract  in  question,  and 
the  bill  was  not  obnoxious  to  demurrer  because  of  the  absence  of  the 
provision  specifying  the  time  in  which  the  performance  should  take 
place.  The  allegation  in  the  bill  touching  that  matter  is  that  appellant, 
within  a  few  days  after  the  making  of  the  contract,  applied  to  appellee 
for  performance  on  appellee's  part,  and  that  appellant  at  the  same  time 


FORM   REQUIRED  77 

offered  to  perform  on  his  part  by  paying  the  full  balance  of  the  pur- 
chase price.     *     *     * 

It  is  urged  that  this  contract  lacks  in  the  material  element  of  mu- 
tuality. The  particular  ground  upon  which  this  contention  is  based  is 
that  the  contract  is  signed  by  appellee  only.  It  is  found  in  option  con- 
tracts, and  unilateral  contracts  generally,  that  the  rule  here  contended 
for  has  no  application ;  that  the  mere  verbal  acceptance  by  the  second 
party  to  the  contract,  or  the  vendee,  or  the  person  holding  the  option, 
with  notice  thereof  to  the  vendor  and  an  offer  to  perform,  renders 
the  contract  mutual  and  binding. 

But  it  is  said  that  in  the  particular  contract  before  us  there  was  no 
future  act  or  option  contemplated,  and  that  the  contract  had  all  its 
validity  at  the  time  it  was  originally  made,  and  that  to  entitle  specific 
performance  of  such  contract  there  must  be  mutuality  of  obligation 
and  remedy.  It  is  difficult  to  understand  upon  what  substantial  ground 
the  difference  in  the  rule  applicable  to  the  two  sets  of  contracts  con- 
tended for,  if  it  exists,  is  based.  We  are  unable  to  understand  why 
the  mere  written  option  signed  by  the  vendor  shall  bind  him  by  the 
verbal  acceptance  of  the  vendee  and  his  oft'er  to  perform  be  held  to 
be  a  mutual  and  binding  contract  within  the  statute  of  frauds,  and 
the  contract  of  sale  acknowledging  the  receipt  of  part  payment,  signed 
by  the  vendor,  shall  be  held  void  for  want  of  mutuality  upon  the  al- 
leged ground  that  the  vendee  has  not  -bound  himself  to  perform  by 
some  writing.  We  are  aware  that  there  is  a  diversity  of  opinion  and 
a  contrariety  of  holdings  by  the  courts  of  last  resort  in  the  various 
states  upon  this  subject;  but  a  careful  review  of  the  authorities  leads 
us  to  conclude  that  a  contract  otherwise  clear  and  explicit  is  sufficient 
to  meet  the  requirements  of  the  statute  of  frauds,  if  signed  by  the 
vendor. 

In  29  Am.  &  Eng.  Enc.  Law  (2d  Ed.)  the  subject  under  considera- 
tion is  extensively  discussed  and  the  authorities  touching  it  reviewed, 
and  the  conclusion  there  announced  is  (page  858)  :  "The  weight  of 
authority  is  that  the  statute  is  satisfied  if  the  memorandum  be  signed 
by  the  parties  sought  to  be  charged  alone,  or,  in  other  words,  by  the 
party  defendant  in  an  action  brought  to  enforce  the  contract,  whether 
he  be  vendor  or  vendee.  In  the  case  of  a  contract  for  the  sale  of 
lands,  the  vendor  is  usually  the  person  to  be  charged,  and  a  memoran- 
dum signed  by  him  alone  is  valid.  The  party  not  signing  the  memo- 
randum is  not  bound  unless,  as  held  by  some  authorities,  he  has  ac- 
cepted the  same  as  a  valid,  subsisting  contract.  Want  of  mutuality 
arising  from  the  failure  of  both  parties  to  sign  cannot  be  successfully 
pleaded  as  a  defense  by  the  party  who  did  sign,  as  the  act  of  filing  a 
bill  for  specific  performance  binds  the  plaintiff  and  readers  the  con- 
tract mutual." 

A  reference  to  the  authorities  there  cited  shows  that  the  rule  thus 
obtains  in  England  and  in  the  majority  of  the  United  States.  Speak- 
ing of  this  rule,  Mr.  Pomeroy,  in  his  work  on  Specific  Performance 


78  BEQUIKED  TO   BE   IN    WRITING 

(section  75),  in  part  says:  "It  may,  perhaps,  be  sustained  upon  the 
following  grounds:  The  statute  of  frauds  does  not  reach  the  sub- 
stance of  contracts  and  render  them  valid  or  invalid.  It  simply  fur- 
nishes a  rule  of  evidence.  Whenever,  therefore,  any  agreement  is 
enforced  against  a  defendant  who  has  signed  it  by  a  plaintiff  who  has 
not,  it  cannot  be  said  that  the  agreement,  so  far  as  it  purports  to  bind 
the  plaintiff,  is  a  nullity.  In  the  suit  against  him  the  statute  does  no 
more  than  require  a  certain  kind  of  proof  in  case  he  avails  himself  of 
it  as  a  defense.  The  defense,  however,  .is  wholly  a  personal  one,  and 
if  he  neglects  to  set  it  up  the  agreement  would  be  established  against 
him,  notwithstanding  the  statute.  For  these  reasons  it  cannot  be  said 
that  a  memorandum  signed  by  one  party  alone  is  so  completely  want- 
ing in  mutuality  that  no  action  upon  it  can  be  sustained."  ^ 

Mr.  Story,  in  his  Equity  Jurisprudence  (volume  2,  §  736a),  says: 
"But  it  is  not  necessary  to  the  specific  performance  of  a  written  agree- 
ment that  it  should  be  signed  by  the  party  seeking  to  enforce  it.  If 
the  agreement  is  certain,  fair,  and  just  in  all  its  parts,  and  signed  by 
the  party  sought  to  be  charged,  that  is  sufficient.  The  want  of  mu- 
tuality is  no  objection  to  its  enforcement." 

Parsons,  in  his  work  on  Contracts  (volume  2,  p.  290),  says:  "And 
it  is  now  quite  settled  that  the  agreement  need  not  be  signed  by  both 
parties,  but  only  by  him  who  is  to  be  charged  by  it.  And  he  is  estop- 
ped from  denying  the  execution  of  the  instrument  on  the  ground  that 
it  wants  the  signature  of  the  other  party." 

Early  in  the  nineteenth  century  the  question  came  before  Chancel- 
lor Kent,  and  in  two  cases  (Parkhurst  v.  Van  Cortlandt,  1  Johns.  Ch. 
[N.  Y.]  282,  and  Benedict  v.  Lynch,  1  Johns.  Ch.  [N.  Y.]  370,  7  Am. 
Dec.  484)  the  chancellor  intimated  that  the  rule  was  as  contended  for 
by  appellee.  But  in  1817,  in  Clason  v.  Bailey  &  Vorhees,  14  Johns. 
(N.  Y.)  484,  the  question  was  again  before  him  for  consideration,  and 
the  authorities  are  fully  reviewed,  and  the  conclusion  of  the  chancellor 
is  thus  stated  (page  486)  :  "Clason's  name  was  inserted  in  the  con- 
tract by  his  authorized  agent,  and  if  it  were  admitted  that  the  name 
of  the  other  party  was  not  there  by  their  direction,  yet  the  better  opin- 
ion is  that  Clason,  the  party  who  is  sought  to  be  charged,  is  estopped 
by  his  name  from  saying  that  the  contract  was  not  duly  signed  within 
the  purview  of  the  statute  of  frauds,  and  that  it  is  sufficient  if  the 
agreement  be  signed  by  the  party  to  be  charged.  It  appears  to  me  that 
this  is  the  result  of  the  weight  of  authority  both  in  the  courts  of  law 
and  equity."  After  reviewing  the  authorities  the  chancellor  further 
said  (page  489)  :  "I  have  thought,  and  often  intimated,  that  the 
weight  of  argument  was  in  favor  of  the  construction  that  the  agree- 
ment concerning  lands,  to  be  enforced  in  equity,  should  be  mutually 
binding,  and  that  the  one  party  ought  not  to  be  at  liberty  to  enforce 
at  his  pleasure  an  agreement  which  the  other  was  not  entitled  to  claim. 
It  appears  to  be  settled  (Hawkins  v.  Holmes,  1  P.  Wms.  770)  that, 
though  the  plaintiff  has  signed  the  agreement,  he  cannot  enforce  it 


FORM   REQUIRED  79 

against  the  party  who  has  not  signed  it.  The  remedy,  therefore,  in 
such  case,  is  not  mutual.  But,  notwithstanding  this  objection,  it  ap- 
pears from  the  review  of  the  cases  that  the  point  is  too  well  settled 
to  be  now  questioned."  To  like  effect  is  McCrea  v.  Punnort,  16 
Wend.  (N.  Y.)  460,  30  Am.  Dec.  103. 

So  far  as  we  are  advised  the  question  was  first  presented  to  this 
court  in  Johnson  v.  Dodge,  17  111.  433,  442.  That  was  a  bill  for  spe- 
cific performance  of  a  contract  for  the  sale  of  land  signed  by  the  ven- 
dor only.  The  vendee  was  to  pay  one-fourth  in  cash  and  one-fourth 
in  one,  two,  and  three  years,  respectively.  He  paid  $5D  at  the  time 
the  writing  was  made  and  delivered  to  him.  The  vendee  offered  to 
perform  and  the  vendor  refused,  when  the  vendee's  bill  was  filed 
and  dismissed  for  want  of  equity.  This  court  reversed  the  decree  of 
the  lower  court,  and  upon  the  subject  now  being  considered  said:  "It 
was  not  necessary  to  the  obligation  of  the  contract  that  it  should  have 
been  signed  by  the  vendee.  His  acceptance  and  possession  of  the  con- 
tract, and  payment  of  money  under  it,  are  unequivocal  evidences  of 
his  concurrence,  and  constitute  him  a  party  as  fully  and  irrevocably  as 
his  signing  the  contract  could" — citing  2  Parsons  on  Contracts,  290; 
McCrea  v.  Purmort,  supra;  Shirley  v.  Shirley,  7  Blackf.  (Ind.)  452; 
Estes  V.  Furlong,  59  111.  298;   Cossitt  v.  Hobbs,  56  111.  231. 

In  Esmay  v.  Gorton,  18  111.  483,  486,  it  is  said:  "While  the  contract 
must  be  mutual,  the  current  of  authorities  seems  to  settle  the  construc- 
tion of  the  statute  of  frauds  as  only  requiring  the  signature  of  the 
party  to  be  charged,  and  the  party  so  charged,  on  bill  for  specific  per- 
formance, may  not  allege  the  want  of  the  signature  of  the  other  con- 
tracting party."  To  like  effect  are  Farwell  v.  Lowther,  18  111.  252; 
Perkins  v.  Hadsell,  50  111.  216;  Estes  v.  Furlong,  supra;  Spangler  v. 
Danforth,  65  111.  152;  Cradle  v.  Warner,  140  111.  123,  29  N.  E.  1118; 
Memory  v.  Niepert,  131  111.  623,  23  N.  E.  431;  Ames  v.  Moir,  130 
111.  582,  22  N.  E.  535;  Plumb  v.  Campbell,  129  111.  101,  18  N.  E.  790; 
Forthman  v.  Deters,  206  111.  159,  69  N.  E.  97,  99  Am.  St.  Rep.  145. 

The  case  of  Forthman  v.  Deters,  supra,  is  a  very  late  case  and  on 
all  fours  with  the  case  at  bar,  and  in  which  the  question  now  before 
us  was  fully  considered,  and  the  conclusion  there  reached  and  an- 
nounced is  that  where  a  party  accepts  and  adopts  a  written  contract, 
even  though  it  is  not  signed  by  him,  he  is  deemed  to  have  assented  to 
its  terms  and  conditions  and  is  bound  by  them,  and  that,  where  the 
contract  purports  to  be  a  consummated  contract,  the  mere  acceptance 
and  adoption  of  the  writing  establishes  mutuality  and  makes  the  con- 
tract binding  on  both  parties.  We  deem  that  case  conclusive  of  the 
case  at  bar.  We  regard  the  rule  as  too  well  established  to  be  open 
that  appellee,  who  is  the  vendor  having  signed  the  writing  herein  above 
set  forth,  cannot  defeat  performance  upon  the  ground  of  want  of  mu- 
tuality, based  upon  the  fact  alone  that  appellant,  the  vendee,  did  not 
sign  the  same.  The  appellant  had  paid  part  of  the  consideration  and 
had  offered  to  pay  the  whole  of  it  withifi  a  few  days  of  the  making  of 


80  REQUIRED  TO   BE   IN   WRITING 

the  contract,  and  unless  appellee  by  her  answer  shall  show  that  to  en- 
force the  same  would  be  inequitable,  for  some  reason  other  than  the 
mere  want  of  the  signature  of  appellant  to  the  contract,  we  are  of 
the  opinion  that  she  should  be  required  to  perform. 

It  is  suggested  that  the  chancellor  is  vested  with  discretion  in  the 
granting  of  specific  performance,  and  that  therefore  this  court  will  not 
enforce  a  decree  wherein  that  discretion  has  been  exercised  and  re- 
lief denied.  The  discretion  with  which  the  chancellor  is  vested  is  a 
legal,  and  not  arbitrary,  discretion.  He  may  only  exercise  his  discre- 
tion and  deny  relief  when  the  facts  and  doubtful,  or  the  contract  or 
some  of  its  terms  are  so  uncertain  that  injustice  might  arise.  No  such 
condition  here  exists. 

The  decree  of  the  circuit  court  is  reversed,  and  the  cause  remanded 
to  that  court,  with  directions  to  overrule  the  demurrer  and  for  such 
further  proceedings  as  to  justice  and  equity  shall  appertain.  Decree 
reversed. 


2.  Si;PARATE  Pape;rs 


LOUISVILLE  ASPHALT  VARNISH  CO.  v.  LORICK  et  al. 

(Supreme  Court  of  South  Carolina,  18SS.     29  S.  C.  533,  8  S.  E.  8, 
2  L.  R.  A.  212.) 

Action  by  the  Louisville  Asphalt  Varnish  Company  against  Preston 
C.  Lorick  and  William  B.  Lowrance,  partners,  trading  as  Lorick  & 
Lowrance,  to  recover  for  goods  sold  them.  At  the  trial,  a  nonsuit 
was  granted,  and  judgment  rendered  for  defendants.  Plaintiff  ap- 
peals. 

McIvER,  J.^**  This  was  an  action  to  recover  the  sum  of  $83.05,  the 
price  of  certain  varnish  and  paint  alleged  to  have  been  sold  by  plain- 
tiff to  defendants.  The  defense  was  a  general  denial.  At  the  trial  the 
plaintiff  offered  testimony  tending  to  show  that  on  the  16th  October, 
1885,  one  of  its  traveling  salesmen,  Hutchinson  by  name,  took  from 
Moore,  a  clerk  of  defendants,  who,  it  was  admitted,  had  authority  to 
give  the  order,  a  verbal  order  for  the  articles  specified  in  the  account 
sued  on,  which  Hutchinson  immediately  entered  in  his  memorandum 
book  as  follows : 

^Q   65.  Columbia,  S.  C,  Oct.  16,  1885. 

Louisville  Asphalt  Varnish  Co.,  Louisville,  Ky. 

Ship  Lorick  &  Lowrance,  Columbia,  S.  C: 

1  Bi*l.  No.   1    Turpt.    Asphalt   Black   Varuish 55c. 

1      "      D.  Roof  Paint  C 50c. 

12  5  gall.  Pails  D.  Roof,  do 55c 

Cr.  by  2c  gal.,  on  acct.  freight 

60  days.  H.  L.  Hutchinson,  Salesman. 

10  The  dissenting  opinion  of  Simpson,  O.  J.,  is  omitted. 


FORM   EEQUIRED  81 

On  the  same  day,  a  copy  of  this  order  was  sent  by  mail,  by  said 
salesman,  to  the  plaintiff,  who  received  it  on  the  19th  October,  1885, 
and  on  the  next  day  shipped  the  goods,  by  rail,  to  defendants.  On 
the  17th  October,  1885,  the  defendants  wrote  to  plaintiff  as  follows : 
"Louisville  Asphalt  Varnish  Co.,  Louisville — Gents :  Don't  ship  paint 
ordered  through  your  salesman.  We  have  concluded  not  to  handle 
it."  This  letter,  however,  was  not  received  by  plaintiff  until  after  the 
goods  had  been  shipped;  and  upon  its  receipt  plaintiff'  wrote  defend- 
ants, saying  "that  the  shipment  had  gone  before  the  request  to  cancel 
was  received."  When  the  goods  arrived  in  Columbia,  the  defendants 
declined  to  receive  them,  but  what  became  of  them  the  testimony  does 
not  show. 

At  the  close  of  plaintiff's  testimony,  defendants  moved  for  a  non- 
suit, which  was  granted,  upon  the  ground  that  section  2020,  Gen.  St., 
(statute  of  frauds,)  was  fatal  to  a  recovery.  Plaintiff  appeals,  upon 
the  several  grounds  set  out  in  the  record  which  make  these  two  ques- 
tions :  First,  whether  there  was  such  a  note  or  memorandum  in  writ- 
ing of  the  bargain  as  would  satisfy  the  requirements  of  section  2020 
of  the  General  Statutes ;  second,  if  not,  whether  there  was  such  an  ac- 
ceptance and  actual  receipt  of  the  goods  as  would  take  the  case  out 
of  the  operation  of  that  section. 

It  is  quite  certain  that  there  was  no  formal  agreement  in  writing, 
signed  by  the  parties  to  be  charged,  for  the  sale  of  the  goods  in  ques- 
tion, and  we  think  it  equally  certain  that  there  was  no  single  instru- 
ment or  memorandum  in  writing  sufficient  to  satisfy  the  requirements 
of  the  statute ;  for  the  letter  of  the  defendants,  copied  above,  did  not 
specify  the  necessary  particulars  as  to  quantity,  nature,  and  price  of 
the  goods  which  were  the  subjects  of  the  alleged  contract  of  sale,  and 
the  copy  of  the  order  sent  by  the  salesman  to  the  plaintiff,  which  did 
contain  all  the  necessary  particulars,  was  not  signed  by  the  defendants. 
It  is  plain,  therefore,  that  nefther  one  of  these  papers,  standing  alone, 
would  be  sufficient.  But  as  it  is  well  settled  that  the  whole  agreement 
need  not  appear  in  a  single  writing,  but  may  be  made  out  from  sev- 
eral instruments  or  written  memoranda  referring  one  to  the  other, 
and  which,  when  connected  together,  are  found  to  contain  all  the  nec- 
essary elements,  the  precise,  practical  question  in  this  case  is  whether 
the  letter  of  defendants  can  be  connected  with  the  written  order  sent 
by  the  salesman,  so  that  the  two  together  may  constitute  a  sufficient 
note  or  memorandum  in  writing  to  satisfy  the  requirements  of  the 
statute. 

In  Saunderson  v.  Jackson,  2  Bos.  &  P.  238,  the  action  was  for  not 
delivering  certain  articles  alleged  to  have  been  sold  by  defendant  to 
plaintiff,  and  the  question  was  whether  there  was  a  sufficient  note  or 
memorandum  in  writing  of  the  bargain,  under  the  statute  of  frauds. 
It  seems  that  when  the  plaintiff  gave  the  verbal  order  for  the  goods, 
he  was  furnished  by  the  defendant  with  a  bill  of  parcels,  not  signed, 
but  written  on  a  piece  of  paper,  with  a  printed  heading  containing 

TUBOCKM.CONT. — G 


82  REQUIRED  TO   BE   IN    WRITING 

the  name  and  place  of  business  of  defendant.  Shortly  after  this,  de- 
fendant wrote  a  letter  to  plaintiff,  saying:  "We  wish  to  know  what 
time  we  shall  send  you  a  part  of  your  order,"  etc.  The  court  held 
that  the  requirements  of  the  statute  were  complied  with,  saying: 
"This  bill  of  parcels,  though  not  the  contract  itself,  may  amount  to  a 
note  or  memorandum  of  the  contract,  within  the  meaning  of  the  stat- 
ute. *  *  *  At  all  events,  connecting  this  bill  of  parcels  with  the 
subsequent  letter  of  the  defendants,  I  think  the  case  is  clearly  taken 
out  of  the  statute  of  frauds;  for,  although  it  be  admitted  that  the 
letter,  which  does  not  state  the  terms'  of  the  agreement,  would  not 
alone  have  been  sufficient,  yet,  as  the  jury  have  connected  it  with  some- 
thing which  does,  and  the  letter  is  signed  by  the  defendants,  there  is 
then  a  written  note  or  memorandum  of  the  order  which  was  originally 
given  by  the  plaintiff,  signed  by  the  defendants." 

This  case  has  been  expressly  recognized  and  followed  in  this  state, 
in  Toomer  v.  Dawson,  Cheves,  68.  The  same  doctrine  was  applied 
in  Western  v.  Russell,  3  Ves.  &  B.  188.  See,  also,  to  the  same  effect, 
Drury  v.  Young,  58  Md.  546,  42  Am.  Rep.  343,  where,  as  in  the 
case  now  under  consideration,  the  letter  of  defendant  was  written 
for  the  purpose  of  withdrawing  from  the  contract ;  but  as  it  referred 
to  the  previous  order,  the  two,  taken  together,  were  held  to  satisfy 
the  terms  of  the  statute.  In  a  note  to  that  case,  at  page  347  of  the 
volume  of  American  Reports  above  cited,  we  find  the  following: 

"In  Cave  v.  Hastings,  7  Q.  B.  Div.  125,  an  action  for  breach  of  a 
contract  for  the  hire  of  a  carriage  for  more  than  a  year  from  the 
date  of  the  agreement,  at  a  specified  sum  per  month,  it  was  proved  that 
the  plaintiff"  agreed  to  let  the  carriage  to  the  defendant.  A  memoran- 
dum of  the  terms  of  the  agreement  was  signed  by  the  plaintiff',  but 
not  by  the  defendant.  The  defendant  subsequently  wrote  a  letter  to 
the  plaintiff,  desiring  to  terminate  the  agreement,  in  which  he  referred 
to  'our  arrangement  for  the  hire  of  your  carriage,'  and  'my  monthly 
payment.'  There  was  no  other  arrangement  between  the  parties,  to 
which  the  expressions  of  the  defendant  could  have  any  reference,  Ex- 
cept the  agreement  contained  in  the  memorandum  signed  by  the  plain- 
tiff. Held,  that  the  letter  of  the  defendant  was  so  connected,  by  ref- 
erence, to  the  document  containing  the  terms  of  the  arrangement,  as 
to  constitute  it  a  note  and  memorandum  of  the  contract,  signed  by 
him,  within  the  fourth  section  of  the  statute  of  frauds.  The  court 
said:  'There  is  abundant  evidence  that  there  was  an  agreement  which 
was  not  rescinded;  but  the  defendant  now  contends  that  he  is  not 
liable,  because  he  signed  no  memorandum  in  writing  of  the  contract.' 
It  has,  however,  been  long  settled  that  the  whole  agreement  need  not 
appear  in  one  document,  but  the  agreement  may  be  made  out  from 
several  documents.  The  only  document  signed  in  this  case  b}^  the  de- 
fendant was  the  letter  of  the  11th  February,  which  does  not,  in  itself, 
contain  the  terms  of  the  contract.  In  Dobell  v.  Hutchinson,  3  Adol. 
&.  E.  355,  Lord  Denman  states  the  law  on  this  subject  to  be  as  fol- 


FORM   REQUIRED  83 

lows:  'The  cases  on  the  subject  are  not,  at  first  sight,  uniform;  but 
on  examination  it  will  be  found  that  they  establish  this  principle :  that 
when  a  contract  or  note  exists  which  binds  one  party,  any  subsequent 
note  in  writing,  signed  by  the  other,  is  sufficient  to  bind  him,  provided 
it  either  contains  in  itself  the  terms  of  the  contract,  or  refers  to  any 
writing  which  contains  them.'  This  letter  in  question  refers  to  'our 
arrangement.'  Mr.  Gully,  in  his  argument,  contended  that  that  might 
refer  to  some  other  and  different  parol  arrangement ;  but  it  seems  to 
us  that  this  reference  to  the  former  document  is  sufficient,  in  accord- 
ance with  the  principle  laid  down  in  Ridgway  v.  Wharton,  6  H.  L. 
Cas.  237,  where  'instructions'  were  referred  to,  and  it  was  held  that 
parol  evidence  might  be  given  to  identify  the  instructions  referred  to 
with  certain  instructions  in  writing.  This  principle  was  applied  in 
Baumann  v.  James,  16  Law  T.  (N.  S.)  165,  and  carried  still  further 
in  Long  v.  Millar,  41  Law  T.  (N.  S.)  306,  in  which  Bramwell,  L.  J., 
says:  'The  first  question  to  be  considered  is  whether  there  is  a  con- 
tract, valid  according  to  the  provisions  of  the  statute  of  frauds,  sec- 
tion 4.  I  think  that  there  is  a  sufficient  memorandum.  The  plaintiff 
has  signed  a  document  containing  all  the  terms  necessary  to  constitute 
a  binding  agreement,  so  that,  if  he  committed  a  breach  of  it,  he  would 
be  liable  to  an  action  for  damages  or  to  a  suit  for  specific  performance. 
But  the  point  to  be  established  by  the  plaintiff  is  that  the  defendant 
has  bound  himself,  and  a  receipt  was  put  in  evidence  signed  by  him, 
and  containing  the  name  of  the  plaintiff,  the  amount  of  the  deposit, 
and  some  description  of  the  land  sold.  The  receipt  also  uses  the  word 
"purchase,"  which  must  mean  an  agreement  to  purchase,  and  it  be- 
comes apparent  that  the  agreement  alluded  to  is  the  agreement  signed 
by  the  plaintiff,  so  soon  as  the  two  documents  are  placed  side  by  side. 
The  agreement  referred  to  may  be  identified  by  parol  evidence.'  He 
then  goes  on  to  add :  *I  may  further  illustrate  my  view  by  putting  the 
following  cases:  Suppose  that  A.  writes  to  B.,  saying  that  he  will 
give  £1,000  for  B.'s  estate,  and  at  the  same  time  states  the  terms  in 
detail,  and  suppose  that  B.  simply  writes  back  in  return,  "I  accept 
your  offer."  In  that  case,  there  may  be  an  identification  of  the  docu- 
ments by  parol  evidence,  and  it  may  be  shown  that  the  offer  alluded 
to  by  B.  is  that  made  by  A.  without  infringing  the  statute  of  frauds, 
section  4,  which  requires  a  note  or  memorandum  in  writing.'  " 

These  observations,  coming  as  they  do  from  high  authority,  seem  so 
appropriate  to  the  present  case  that  we  have  felt  justified  in  inserting 
them  at  length.  In  Beckwith  v.  Talbot,  95  U.  S.  289,  24  L.  Ed.  496, 
it  was  held  that,  while  the  general  rule  is  "that  collateral  papers  ad- 
duced to  supply  the  defect  of  signature  of  a  written  agreement,  under 
the  statute  of  frauds,  should  on  their  face  sufficiently  demonstrate 
their  reference  to  such  agreement,  without  the  aid  of  parol  proof," 
yet  such  rule  is  not  absolute,  as  "there  may  be  cases  in  which  it  would 
be  a  violation  of  reason  and  common  sense  to  ignore  a  reference 
which  derives  its  significance  from  such  proof."     Accordingly,  it  was 


84  REQUIRED  TO   BE   IN   WRITING 

held  in  that  case  that  "the  defendant,  unless  he  could  show  the  exist- 
ence of  some  other  agreement,  was  estopped  from  denying  that  the 
agreement  referred  to  by  him  in  his  letters  was  that  which  he  induced 
the  plaintiff  to  sign."  Even  in  the  case  of  Johnson  v.  Buck,  35  N. 
J.  Law,  338,  10  Am.  Rep.  243,  which  seems  to  be  much  relied  on  by 
the  counsel  for  respondents,  it  is  conceded  that  parol  evidence  may 
be. received  "to  identify  papers  which,  by  a  reference  in  the  signed 
memorandum,  are  made  parts  of  it,"  While  it  is  true  that  some  of 
the  cases  which  we  have  cited  arose  under  the  fourth  section  of  the 
statute  of  frauds,  and  not  under  the  seventeenth  section,  v^hich  con- 
trols the  present  case,  yet  it  is  admitted  by  Kent,  C.  J.,  in  Bailey  v. 
Ogden,  3  Johns.  (N.  Y.)  412,  3  Am.  Dec.  509,  that  the  words  of  the 
two  sections  are  in  this  respect  similar,  and  require  the  same  construc- 
tion, and  it  was  so  held  in  Townsend  v.  Hargraves,  118  Mass.  325. 

It  seems  to  us,  therefore,  that  the  letter  of  defendants,  taken,  as 
it  must  be,  in  connection  with  the  order  sent  to  plaintiff  by  the  sales- 
man, to  which  it  expressly  referred,  and  which  was  in  writing,  and 
specified  all  the  necessary  particulars  as  to  price,  quantity,  quality, 
and  time  of  payment,  constituted  a  sufficient  note  or  memorandum  in 
writing  of  the  bargain  to  take  the  case  out  of  the  statute  of  frauds. 
In  the  absence  of  any  evidence  that  any  other  order  was  given,  the  lan- 
guage of  the  letter — "Don't  ship  paint  ordered  through  your  sales- 
man"— must  necessarily  be  regarded  as  referring  to  the  order  of  which 
a  memorandum  in  writing  was  taken  at  the  time  by  the  salesman,  and 
a  copy  thereof  immediately  forwarded  to  the  plaintiff,  who  at  once 
filled  the  order,  and  shipped  the  goods  to  the  defendants.  This  is  a 
stronger  case  than  that  of  Beckwith  v.  Talbot,  supra,  for  there  the 
letter  of  the  defendant  simply  referred  to  the  agreement,  without  in- 
dicating, when  or  how  it  had  been  made,  while  here  the  letter  refers 
to  a  particular  article  "ordered  through  your  salesman,"  and  we  hear 
of  no  other  order  through  the  salesman  or  in  any  other  way.  The 
only  necessity  for  any  parol  evidence  at  all,  if,  indeed,  there  was  any, 
was  to  identify  the  order  sent  by  the  salesman,  and  for  this  purpose, 
as  we  have  seen,  such  evidence  would  be  competent. 

Suppose  the  plaintiff  had,  on  the  16th  October,  1885,  written  a  letter 
to  defendants,  proposing  to  sell  them  the  articles  mentioned  in  the 
salesman's  order,  in  the  quantities  there  stated,  and  at  the  prices  and 
on  the  time  there  mentioned,  and  that  defendants  had  replied  by  let- 
ter, simply  saying,  "I  accept  your  offer,"  without  repeating  the  partic- 
ulars as  to  quantity,  price,  etc.,  it  could  not  be  doubted  that,  although 
defendants'  letter — the  only  paper  which  they  signed — did  not  contain 
in  itself  the  necessary  particulars  of  the  bargain,  yet  the  two  letters, 
taken  together,  would  be  held  a  sufficient  compliance  with  the  stat- 
ute. It  seems  to  us  that  the  transaction  here  in  question  was  in  prin- 
ciple practically  the  same  as  that  in  the  supposed  case,  and  we  think 
there  was  error  in  holding  that  the  contract  sued  on  was  void  under 
the  statute  of  frauds. 


FORM   REQUIEED  85 

We  do  not  see  how  it  is  possible  to  regard  the  letter  of  the  defend- 
ants as  a  denial  of  the  order  given  to  the  salesman  by  their  clerk, 
Moore,  who,  it  was  conceded,  had  authority  to  give  the  order,  for  the 
only  testimony  upon  the  subject  is  that  of  the  salesman,  who  says 
distinctly  that  Moore  gave  him  the  order,  and  he  entered  it  in  his 
memorandum  book,  and  there  is  no  evidence  to  the  contrary.  Moore 
was  not  examined  as  a  witness.  It  is  true  that,  after  the  controversy 
between  these  parties  had  arisen,  the  defendants,  in  a  letter  as  late 
as  31st  December,  1885,  addressed  to  the  attorney  who  had  been  con- 
sulted by  the  plaintiff,  do  repudiate  the  purchase;  but  that  is  not  the 
letter  relied  upon  by  plaintiff  to  establish  the  contract.  On  the  con- 
trary, the  one  relied  on  is  that  of  the  17th  October,  1885,  which  has 
been  copied  above,  and  the  question  is  whether  the  last-mentioned  let- 
ter can  be  regarded  as  a  denial  of  having  given  the  order.  The  mani- 
fest purpose  of  that  letter  was  to  countermand  the  order,  and  this 
necessarily  presupposed  that  the  order  had  been  given.  The  terms 
used  clearly  show  this :  "Don't  ship  the  paint  ordered  through  your 
salesman.  We  have  concluded  not  to  handle  it."  This  clearly  means 
that  the  paint  had  been  ordered,  but  that  defendants  had  subsequently 
changed  their  minds  and  "concluded  not  to  handle  it;"  and  we  don't 
see  how  it  can  be  construed  to  mean  anything  else.  We  have  then  an 
admission  in  writing  that  an  order  for  the  goods  in  question  through 
the  salesman  had  been  given  and  we  have  the  order  referred  to,  like- 
wise in  writing;  and  the  two  together  fully  satisfy  the  requirements 
of  the  statute. 

Under  the  view  which  we  have  taken  of  the  first  question  raised  by 
this  appeal,  the  second  question  becomes  immaterial,  and  need  not, 
therefore,  be  considered.  The  judgment  of  this  court  is  that  the  judg- 
ment of  the  circuit  court  be  reversed,  and  that  the  case  be  remanded 
to  that  court  for  a  new  trial. 

McGowAN,  J.,  concurs.    Simpson,  C.  J.,  dissents. 


3.  By  Whom  Signed 


See  Ullsperger  v.  Meyer,  supra  page  74. 


86  BEQULRED   TO   BE   IN   WRITING 


IV.  Effect  of  Noncompliance 


BRITAIN  V.  ROSSITER. 

(Court  of  Appeal,    1S79.      11   Q.  B.   Div.    123.) 

Action  for  wrongful  dismissal. 

At  the  trial  it  appeared  that  the  plaintiff  entered  into  the  defend- 
ant's service  as  clerk  and  accountant  for  one  year. 

The^plaintift'  and  the  defendant  had  interviews  upon  the  17th,  19th, 
and  21st  of  April,  1877.     The  21st  was  a  Saturday,  and  the  plaintiff^ 
entered  upon  the  defendant's  service  upon  Monday,  the  23d.    The  final_ 
arrangement  between  the  parties  was  arrived  at  upon  the  Saturday. 

The  plaintiff  remained  some  months  in  the  defendant's  service  anT^ 
was  then  dismissed  without  a  three  months'  notice.  The  defendant  re- 
lied upon  the  statute  of  frauds  (section  4).  At  the  trial  before  Haw- 
kins, J.,  the  verdict  was  entered  for  the  defendant  upon  the  grounds : 
First,  that  the  contract  was  made  finally  upon  Saturday,  the  21st  of  _ 
April,  and  being  made  upon  that  day  was  within  the  statute  of  frauds 
(section  4) ;  secondly,  that  there  was  no  evidence  of  a  new  contract  on 
Monday,  April  the  23d,  it  not  being  prove'd  that  the  contract  made  on 
the  previous  Saturday  was  altered  or  rescinded.  The  exchequer  divi- 
sion having  refused  a  new  trial  on  the  ground  of  misdirection : 

1878,  May  29.  Mr.  Firth  moved  in  this  court,  by  way  of  appeal. 
He  contended :  First,  that  the  contract  of  service  for  one  year  was  to 
begin  from  Monday,  the  23d  of  April,  and  therefore  that  it  was  a  con- 
tract to  be  perform^ed  within  a  year ;  secondly,  that  the  plaintiff  could 
not  be  dismissed  without  notice,  a  verbal  contract  being  in  existence; 
thirdly,  that  the  contract  having  been  partly  performed,  was  taken  out 
of  the  statute  of  frauds  (section  4).  As  to  the  first  point  he  cited  Caw- 
thorne  v.  Cordrey,  13  C.  B.  (N.  S.)  406,  32  Law  J.  C.  P.  152. 

Brett,  L.  J.^^  Upon  the  best  consideration  which  I  can  give  to  this 
case,  it  seems  to  me  that  this  rule  should  be  discharged.  I  think  that 
Hawkins,  J.,  was  right,  and  that  the  exchequer  division  was  also  right. 
It  was  clearly  established  that  on  Saturday,  the  21st  of  April,  a  con- 
tract of  service  was  in  express  terms  entered  into  between  the  plain- 
tiff and  the  defendant  that  the  plaintiff'  should  serve  the  defendant  for 
one  year,  the  contract  to  commence  the  Monday  following.  It  cannot 
be  disputed  that  a  contract  of  that,  kind  is  within  the  4th  sectioiTof 
the  statute  of  frauds, — that  is  to  say,  it  is  a  promise  founded  upon 

1 1  For  discussion  of  principles,  see  Clark  on  Contracts  (2(i  Ed.)  §§  50,  51. 
13  The  statement  of  facts  is  abridged  and  the  opinion  of  Brett,  L.  J.,  on 
auotner  point  is  omitted. 


EFFECT   OF  NONCOMPLIANCE  87 

a  sufficient  consideration, — but,  it  being  only  verbal,  neither  party  can 
bring  an  action  upon  it  so  as  to  charge  the  other. 

It  is,  however,  contended  that  as  the  plaintiff  did  on  Monday,  the 
23d  of  April,  enter  into  the  defendant's  service  and  continue  in  it  for 
some  months,  another  contract  to  serve  for  a  year  ought  to  be  im- 
plied, attended  with  the  same  consequences  as  the  original  contract,  but 
outside  the  statute  of  frauds.  It  is  alleged  that  this  contract  can  be  im- 
plied, because  the  contract  originally  entered  into  is  void.  But,  ac- 
cording to  the  true  construction  of  the  statute,  it  is  not  correct  to  say 
that  the  contract  is  void ;  and,  in  my  opinion,  no  distinction  exists 
between  the  4th  and  the  17th  sections  of  the  statute.  At  all  events,  the 
contract  is  not  void  under  the  4th  section.  The  contract  exists,  but  no 
one  is  liable  upon  it.  It  seems  to  me  impossible  that  a  new  contract 
can  be  implied  from  the  doing  of  acts  which  were  clearly  done  in  per- 
formance of  the  first  contract  only,  and  to  infer  from  them  a  fresh 
contract  would  be  to  draw  an  inference  contrary  to  the  fact.  It  is  a 
proposition  which  cannot  be  disputed  that  no  new  contract  can  be  im- 
plied from  acts  done  under  an  express  contract,  which  is  still  subsist- 
ing. All  that  can  be  said  is  that  no  one  can  be  charged  upon  the  orig- 
inal contract  because  it  is  not  in  writing. 

At  the  bar  reliance  was  placed  upon  Carrington  v.  Roots,  2  Alees. 
&  W.  248,  and  Reade  v.  Lamb,  6  Exch.  130.  In  the  former  case 
Parke,  B.,  said:  "I  think  the  right  interpretation  of"  the  4th  section 
of  the  statute  of  frauds  "is  this :  that  an  agreement  which  cannot  be 
enforced  on  either  side  is  as  a  contract  void  altogether."  In  the  latter, 
Pollock,  C.  B.,  said:  "Carrington  v.  Roots,  2  ilees.  &  W.  248,  is  in 
effect  a  decision  that,  for  the  purposes  of  the  present  question,  there 
is  no  distinction  between  the  4th  and  17th  sections  of  the  statute  of 
frauds,  and  that  not  only  no  action  can  be  brought  upon  an  agreement 
within  the  4th  section  of  that  statute  if  it  be  not  reduced  into  writing, 
but  that  the  contract  is  also  void."  With  regard  to  these  dicta  it  is 
enough  to  say  that  the  doctrine  thereby  laid  down  was  unnecessary  for 
the  decisions  in  those  cases;  for  it  being  clear  that  no  action  can  be 
brought  on  the  verbal  contract  itself,  it  is  also  clear  that  neither  party 
can  be  held  liable  upon  it  indirectly  in  any  action  which  necessitates 
the  admission  of  the  existence  of  the  contract. 

The  two  cases  which  I  have  mentioned  were  considered  in  Lcrou.\ 
v.  Brown,  12  C.  B.  801 ;  and  Jervis,  C.  J.,  undoubtedly  took  the  same 
view  of  them  as  I  do,  and  gave  the  interpretation  necessary  for  that 
case,  namely,  that  the  contract  is  not  void,  but  only  incapable  of  being 
enforced,  and  that  any  claim  which  depends  upon  the  contract  as  such 
cannot  be  maintained.  If  the  contrary  view  had  prevailed,  it  would 
have  been  decided  in  that  case  that  the  statute  of  frauds  (section  4), 
had  a  territorial  operation  ;  whereas  if  it  ai)]ilies  merely  to  the  enforce- 
ment of  the  contract,  then  it  is  a  statute  with  resj^cct  to  the  i)ro,ccdure 
of  the  English  courts,  and  it  is  applicable  to  contracts  made  abroad 
as  well  as  in  England.     Moreover,  the  case  of  SncUing  v.  Lord  Hunt- 


88  REQUIRED   TO    BE    IN    WRITING 

ingfield,  1  Cromp.,  M.  &  R.  20,  has  not  been  overruled  by  subsequent 
cases,  but  the  doctrine  there  laid  down  has  been  strongly  supported  by 
subsequent  cases,  and  in  my  opinion  it  certainly  ought  not  to  be  over- 
ruled now.  In  my  view  the  contract  entered  into  on  the  21st  of  April 
was  not  void,  but  existing,  and  from  a  part  performance  of  it  a  fresh 
contract  ought  not  to  be  implied.  The  plaintiff,  therefore,  is  driven 
to  rely  upon  the  original  contract,  but  he  cannot  maintain  an  action 
upon  that,  inasmuch  as  it  is  not  in  writing. 

It  has  been  further  contended  that,  -as  the  contract  of  the  21st  of 
April  has  been  partly  performed,  it  may  be  enforced,  notwithstand- 
ing the  statute  of  frauds,  and  that  the  equitable  doctrine  as  to  part 
performance  may  be  applied  to  it.  It  is  well  known  that  where  a  con- 
tract for  the  sale  of  land  had  been  partly  performed,  courts  of  equity 
did  in  certain  cases  recognize  and  enforce  it;  but  this  doctrine  was 
exercised  only  as  to  cases  concerning  land,  and  was  never  extended  to 
contracts  like  that  before  us,  because  they  could  not  be  brought  within 
the  judisdiction  of  courts  of  equity.  Those  courts  could  not  entertain 
suits  for  specific  performance  of  contracts  of  service,  and  therefore 
a  case  like  the  present  could  not  come  before  them.  As  to  the  applica- 
tion of  the  doctrine  of  part  performance  to  suits  concerning  land,  I  will 
merely  say  that  the  cases  in  the  court  of  chancery  were  bold  decisions 
on  the  words  of  the  statute.  The  doctrine  was  not  extended  to  any 
other  kind  of  contract  before  the  judicature  acts.  Can  we  so  extend  it 
now?  I  think  that  the  true  construction  of  the  judicature  acts  is  that 
[hey  confer  no  new  rights;  they  only  confirm  the  rights  which  previ- 
ously were  to  be  found  existing  in  the  courts  either  of  law  or  of 
equity.  If  they  did  more,  they  would  alter  the  rights  of  parties,  where- 
as in  truth  they  only  change  the  procedure. 

Before  the  passing  of  the  judicature  acts  no  one  could  be  charged  on 
this  contract  either  at  law  or  in  equity ;  and  if  the  plaintiff  could  now 
enforce  this  contract,  it  would  be  an  alteration  of  the  law.  I  am  of 
opinion  that  the  laws  remains  as  it  was,  and  that  the  plaintiff  cannot 
maintain  this  action  for  breach  of  contract. 

Cotton,  L.  J.  We  refuse  to  grant  a  rule  on  the  ground  that  the  con- 
tract entered  into  on  Saturday,  the  21st  of  April,  was  to  be  performed, 
within  a  year,  and  therefore  not  within  the  .operation  of  the  4th  sec- 
tion of  the  statute  of  frauds.  The  contract  clearly  was  within  that 
enactment.  On  the  other  points  we  granted  a  rule,  but  after  having 
heard  the  arguments  on  behalf  of  the  plaintiff,  I  think  that  the  rule 
for  a  new  trial  must  be  discharged.  It  has  been  contended  that  al- 
though the  express  contract  cannot  be  enforced,  nevertheless  a  contract 
which  can  be  enforced  may  be  implied  from  conduct  of  the  parties,  and 
it  has  been  argued  that  the  rule  does  not  apply  which  forbids  a  con- 
tract to  be  implied  where  an  express  contract  has  been  concluded,  be- 
cause the  contract  was  void  under  the  provisions  of  the  statute  of 
frauds  (section  4) ;  but  in  my  opinion  that  is  not  the  true  construction 


EFFECT  OF   NONCOMPLIANCE  89 

of  the  enactment,  which  provides  that  no  action  shall  be  brought  to 
charge  any  person  upon  the  verbal  contract. 

In  the  first  place,  I  may  observe  that  to  hold  that  this  enactment 
makes  void  verbal  contracts  falling  within  its  provisions,  would  be 
inconsistent  with  the  doctrine  of  the  courts  of  equity  with  regard  to 
part  performance  in  suits  concerning  land.  If  such  contracts  had  been 
rendered  void  by  the  legislature,  courts  of  equity  would  not  have  en- 
forced them,  but  their  doctrine  was  that  the  statute  did  not  render  the 
contracts  void,  but  required  written  evidence  to  be  given  of  them ; 
and  courts  of  equity  were  accustomed  to  dispense  with  that  evidence 
in  certain  instances.  During  the  argument  some  decisions  were  relied 
upon  as  shewing  that  the  contract  in  the  present  case  was  void.  In 
Carrington  v.  Roots,  2  Mees.  &  W.  248,  certain  expressions  were  used 
by  the  judges  which  indicated  that  in  their  opinion  a  verbal  contract 
falling  within  section  4  was  void;  but  I  think  that  their  language,  when 
carefully  analyzed,  merely  means  that  the  contract  was  not  enforceable, 
either  directly  or  indirectly  by  action  at  law.  I  think  it  unnecessary 
to  go  into  the  case  of  Reade  v.  Lamb,  6  Exch.  130.  It  was  a  case  de- 
cided upon  special  demurrer,  and  the  question  to  which  the  attention 
of  the  judges  was  directed,  was  whether  the  pleadings  were  correct 
in  point  of  form. 

It  has  been  further  argued  that  the  contract  may  be  enforced),  because 
it  has  been  in  part  performed.  Let  me  consider  what  is  the  nature  of 
the  doctrine  as  to  part  performance.  It  has  been  said  that  the  prin- 
ciple of  that  doctrine  is  that  the  court  will  not  allow  one  party  to  a 
contract  to  take  advantage  of  part  performance  of  the  contract,  and 
to  permit  the  other  party  to  change  his  position  or  incur  expense  or 
risk  under  the  contract,  and  then  to  allege  that  the  contract  does  not 
exist ;  for  this  would  be  contrary  to  conscience.  It  is  true  that  some 
dicta  of  judges  may  be  found  to  support  this  view,  but  it  is  not  the 
real  explanation  of  the  doctrine,  for  if  it  were,  part  payment  of  the 
purchase  money  would  defeat  the  operation  of  the  statute.  But  it  is 
well  established  and  cannot  be  denied  that  the  receipt  of  any  sura, 
however  large,  by  one  party  under  the  contract,  will  not  entitle  the  oth- 
er to  enforce  a  contract  which  comes  within  the  4th  section.  What  can 
be  more  contrary  to  conscience  than  that  after  a  man  has  received  a 
large  sum  of  money  in  pursuance  of  a  contract,  he  should  allege  that 
it  was  never  entered  into?  The  true  ground  of  the  doctrine  in  equity 
is  that  if  the  court  found  a  man  in  occupation  of  land,  or  doing  such 
acts  with  regard  to  it  as  would,  prima  facie,  make  him  liable  at  law 
to  an  action  of  trespass,  the  court  would  hold  that  there  was  strong 
evidence  from  the  nature  of  the  user  of  the  land  that  a  contract  exist- 
ed, and  would  therefore  allow  verbal  evidence  to  be  given  to  show  the 
real  circumstances  under  which  possession  was  taken. 

Does  this  doctrine,  when  so  explained,  apply  to  the  present-  case'-" 
I  will  firsi  mention  the  provisions  of  Judicature  Act  1873,  §  24,  subsccs. 
4,  7.     These  provisions  enable  the  courts  of  common  law  to  deal  with 


90  EEQUIBED  TO   BE   IN   WRITING 

equitable  rights  and  to  give  relief  upon  equitable  grounds;  but  they 
do  not  confer  new  rights.  The  different  divisions  of  the  high  court 
may  dispose  of  matters  within  the  jurisdiction  of  the  chancery  and  the 
common  law  courts ;  but  they  cannot  proceed  upon  novel  principles. 
Could  the  present  plaintiff  have  obtained  any  relief  in  equity  before 
the  passing  of  the  judicature  acts?  I  think  that  he  could  not.  The 
doctrine  as  to  part  performance  has  always  been  confined  to  questions 
relating  to  land ;  it  has  never  been  applied  to  contracts  of  service,  and 
it  ought. not  now  to  be  extended  to  cases  in  which  the  court  of  chan- 
'cery  never  interfered. 

Thesiger,  L.  J.  Two  questions  must  be  considered  in  this  case : 
First,  whether  the  plaintiff  could  maintain  an  action  at  law ;  secondly, 
whether,  if  he  could  not  maintain  an  action  at  law,  he  could  maintain 
a  suit  in  equity.  I  am  compelled  to  subscribe  to  the  opinion  that  the 
plaintiff  had  no  remedy  either  at  law  or  in  equity.  I  have  been  un- 
willing to  come  to  this  conclusion,  because  it  is  manifestly  unjust  that 
where  a  contract  of  hiring  has  been  acted  on  for  a  certain  time,  one 
party  who  has  had  the  advantage  of  it  should  be  able  to  put  an  end 
to  it;  and  I  should  have  been  glad  to  decide  that  the  plaintiff  was 
entitled  to  a  reasonable  notice  of  dismissal. 

First,  has  the  plaintiff  a  right  of  action  at  law  ?  It  is  clear  that  a  con-., 
tract  was  made  on  Saturday,  the  21st  of  April,  and  it  cannot  be  con- 
tended that  a  contract  made  at  that  date  to  commence  from  the  23d  of_ 
Apririsnot  witliin  the  4th  section  of  the  statute  of  frauds.  It  is  nec- 
essary to  consider  what  is  the  effect  of  the  statute  upon  such  a  con- 
tract. Is  it  that  the  contract  is  wholly  null  so  that  it  does  not  prevent 
the  proof  of  any  other  contract,  or  is  it  that  the  contract  exists  but 
cannot  be  enforced?  Certain  dicta  are  to  be  found  in  the  books  from 
which  it  might  appear  that  some  of  the  judges  have  considered  the 
verbal  contract  as  absolutely  void.  But  if  those  dicta  are  carefully 
examined,  it  will  be  found  that  they  are  not  necessary  for  the  decision 
of  the  cases  in  which  they  appear,  and  upon  referring  to  subsequent 
cases  it  will  be  found  that  it  has  been  decided  in  clear  terms  that  the 
verbal  contract  is  not  actually  void.  It  is  impossible  to  say  that  the 
words  of  the  statute  make  the  verbal  contract  void.  That  a  verbal 
contract  is  not  void,  is  proved  by  the  circumstance  that  where  one  party 
may  be  charged  upon  it,  but  that  the  party  who  has  not  signed  cannot 
be  charged. 

It  may  also  be  urged  with  some  show  of  reason  that  though  there 
is  a  difference  in  language  between  the  4th  and  17th  sections  of  the 
statute  of  frauds,  they  are  substantially  identical  in  construction,  and 
Carrington  v.  Roots,  2  Mees.  Si  W.  248,  and  Reade  v.  Lamb,  6  Exch. 
130,  may  perhaps  be  cited  in  support  of  that  argument.  And  it  is  plain 
that  verbal  contracts  under  the  17th  section  are  not  absolutely  void  for 
all  purposes,  for  the  section  provides  that  part  performance  by  payment 
or  acceptance  and  receipt  of  goods  shall  authorize  the  court  to  look  at 
the  terms  of  the  contract,  although  it  is  not  in  writing.     But  I  need  not 


EFFECT  OF  NONCOMPLIANCE  91 

discuss  this  question  further,  for  in  Snelling  v.  Huntingfield,  1  Cromp., 
M.  &  P..  20,  which  has  never  been  overruled,  but,  on  the  contrary,  has 
been  often  followed,  it  was  held  that  a  contract  not  enforceable  by  rea- 
son of  the  statute  of  frauds  (section  4)  nevertheless  existed,  and  no  con- 
tract can  be  implied  where  an  express  contract  exists.  I  think  that 
we  are  bound  by  the  authority  of  that  case.  There  was,  therefore,  in 
existence  a  contract  made  in  express  terms  on  Saturday,  the  21st  of 
April,  and  the  plaintiff  cannot  sue  upon  it,  as  it  is  not  in  writing.  It 
appears  to  have  been  held  that,  though  there  may  be  no  right  to  recover 
on  an  executory  contract,  nevertheless,  if  it  has  been  executed  to  the 
extent  of  the  contractee  entering  upon  the  service,  that  is  enough  to 
entitle  him  to  be  paid  for  his  services,  and  if  we  were  not  bound  by 
authority  it  would  be  difficult  to  understand  why,  if  the  plaintiff  can 
sue  for  services  rendered,  he  should  not  equally  be  entitled  to  allege 
that  he  shall  not  be  dismissed  without  notice  or  without  such  notice 
as  was  stipulated  for  in  the  contract.  But  in  Snelling  v.  Hunting-field, 
1  Cromp.,  AI.  &  R.  20,  the  court  of  exchequer  appears  to  have  thought 
that  the  contractee  can  recover  for  services  rendered  but  not  for  dis- 
missal without  notice.  This  seems  to  have  been  the  construction  at 
common  law. 

If  we  turn  to  equity,  we  find  that  it  has  been  held  as  regards  a  sale 
of  land,  that  when  there  has  been  an  entry  by  one  party  to  the  contract, 
that  is  an  overt  act  apparently  done  under  a  contract  which  entitles 
the  court  to  look  at  the  contract  to  see  to  what  contract  the  overt  act 
is  really  referable.  I  confess  that  on  principle  I  do  not  see  why  a  sim- 
ilar doctrine  should  not  be  applied  to  the  case  of  a  contract  of  service, 
and  as  the  doctrine  of  equity  is  based  upon  the  theory  that  the  court 
will  not  allow  a  fraud  on  the  part  of  one  party  to  a  contract  on  faith 
of  which  the  other  party  has  altered  his  position,  I  do  not  see  why  a 
similar  doctrine  should  not  comprehend  a  contract  of  service.  At  the 
same  time  I  feel  that  doctrines  of  this  nature  are  not  to  be  unwarran- 
ably  extended,  and  that  we  ought  not  to  go  further  than  the  decisions 
of  courts  of  equity  as  to  the  principles  of  relief,  and  as  to  the  instances 
to  which  the  doctrine  of  part  performance  is  to  be  applied.  Therefore, 
as  we  cannot  clearly  see  that  the  equitable  doctrine  of  part  perform- 
ance ought  to  be  extended  to  contracts  of  service,  I  think  that  we  ought 
to  keep  within  the  limits  observed  by  the  court  of  chancery  before  the 
passing  of  the  judicature  acts  of  1873  and  1875. 

Rule  discharged. 


92  EEQUIKED   TO   BE   IN   WEITINQ 

V.  Contracts  Within  Section  17  '• 
1.  What  are  Goods,  Wares,  and  Merchandises 


BALDWIN  V.  WILLIAMS. 
(Supreme   Judicial   Court  of  Massachusetts,   1841.     3   ^Nletc.   365.) 

This  case  was  tried  before  Wilde,  J.,  who  made  the  following  re- 
port of  it: 

This  was  an  action  of  assumpsit,  and  the  declaration  set  forth  an 
agreement  of  the  plaintiff  that  he  would  bargain,  sell,  assign,  transfer, 
and  set  over  to  the  defendant,  and  indorse  without  recourse  to  him,  the 
plaintiff,  in  any  event,  two  notes  of  hand  by  him  held,  signed  by  S.  J. 
Gardner;  one  dated  April  24th,  1835,  for  the  payment  of  $1,500;  the 
other  dated  May  5th,  1836,  for  the  payment  of  $500;  and  both  payable 
to  the  plaintiff  or  order  on  the  3d  of  April,  1839,  with  interest  from 
their  dates.  The  declaration  set  forth  an  agreement  by  the  defendant, 
in  consideration  of  the  plaintiff's  agreement  aforesaid,  and  in  pay- 
ment for  said  Gardner's  said  notes,  to  pay  the  plaintiff  $1,000  in  cash, 
and  to  give  the  plaintiff  a  post  note,  made  by  the  Lafayette  Bank,  for 
$1,000,  and  also  a  note  signed  by  J.  B.  Russell  &  Co.  and  indorsed 
by  D.  W.  Williams  for  $1,000. 

The  plaintiff  at  the  trial  proved  an  oral  agreement  with  the  defendant 
as  set  forth  in  the  declaration,  and  an  offer  by  the  plaintiff  to  comply 
with  his  part  of  said  agreement,  and  a  tender  of  said  Gardner's  said 
notes,  indorsed  by  the  plaintiff  without  recourse  to  him  in  any  event, 
and  a  demand  upon  the  defendant  to  fulfil  his  part  of  said  agreement, 
and  the  refusal  of  the  defendant  to  do  so.  But  the  plaintiff  introduced 
no  evidence  tending  to  show  that  any  thing  passed  between  the  parties 
at  the  time  of  making  the  said  agreement,  or  was  given  in  earnest 
to  bind  the  bargain. 

The  judge  advised  a  nonsuit  upon  this  evidence,  because  the  con- 
tract was  not  in  writing  nor  proved  by  any  note  or  memorandurn  in 
writing  signed  by  the  defendant  or  his  agent,  and  nothing  was  received 
by  the  purchaser,  nor  given  in  earnest  to  bind  the  bargain.  A  nonsuit 
was  accordingly  entered,  which  is  to  stand  if  in  the  opinion  of  the 
whole  court  the  agreement  set  forth  in  the  declaration  falls  within  the 
statute  of  frauds  (Rev.  St.  c.  74,  §  4) ;  otherwise,  the  nonsuit  to  be 
taken  off,  and  a  new  trial  granted. 

Wilde,  J.  This  action  is  founded  on  an  oral  contract,  and  the  ques- 
tion is,  whether  it  is  a  contract  of  sale  within  the  statute  of  frauds. 

18  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  55,  56. 


CONTRACTS   WITHIN   SECTION   17  93 

The  plaintiff's  counsel  contends  in  the  first  place  that  the  contract 
is  not  a  contract  for  the  sale  of  the  notes  mentioned  in  the  declaration, 
but  a  mere  agreement  for  the  exchange  of  them ;  and  in  the  second 
place  that  if  the  agreement  is  to  be  considered  as  a  contract  of  sale, 
yet  it  is  not  a  contract  within  that  statute. 

As  to  the  first  point,  the  defendant's  counsel  contends  that  an  agree- 
ment to  exchange  notes  is  a  mutual  contract  of  sale.  But  it  is  not  nec- 
essary to  decide  this  question,  for  the  agreement  of  the  defendant,  as 
alleged  in  the  declaration,  was  to  pay  for  the  plaintiff's  two  notes 
$2,000  in  cash,  in  addition  to  two  other  notes;  andl  that  this  was  a 
contract  of  sale  is,  wc  think,  very  clear. 

The  other  question  is  more  doubtful.  But  the  better  opinion  seems 
to  us  to  be,  that  this  is  a  contract  within  the  true  meaning  of  the  stat- 
ute of  frauds.  It  is  certainly  within  the  mischief  thereby  intended  to  be 
prevented ;  and  the  words  of  the  statute,  "goods"  and  "merchandise," 
are  sufficiently  comprehensive  to  include  promissory  notes  of  hand!. 
The  word  "goods"  is  a  word  of  large  signification ;  and  so  is  the  word 
"merchandise."    "Merx  est  quicquid  vendi  potest." 

In  Tisdale  v.  Harris,  20  Pick.  9,  it  was  decided  that  a  contract  for 
the  sale  of  shares  in  a  manufacturing  corporation  is  a  contract  for  the 
sale  of  goods  or  merchandise  within  the  statute ;  and  the  reasons  on 
which  that  decision  was  founded  seem  fully  to  authorize  a  similar  de- 
cision as  to  promissory  notes  of  hand.  A  different  decision  has  re- 
cently been  made  in  England  in  Humble  v.  Mitchell,  3  Perry  &  D.  141, 
1 1  Adol.  &  E.  207.  In  that  case  it  was  decided  that  a  contract  for  the 
sale  of  shares  in  a  joint-stock  banking  company  was  not  within  the  stat- 
ute of  frauds.  But  it  seems  to  us  that  the  reasoning  in  the  case  of 
Tisdale  v.  Harris  is  very  cogent  and  satisfactory ;  and  it  is  supported 
by  several  other  cases.  In  Mills  v.  Gore,  20  Pick.  28,  it  was  decided 
that  a  bill  in  equity  might  be  maintained  to  compel  the  redelivery  of 
a  deed  and  a  promissory  note  of  hand,  on  the  provision  in  the  Rev. 
St.  c.  81,  §  8,  which  gives  the  court  jurisdiction  in  all  suits  to  compel 
the  redelivery  of  any  goods  or  chattels  whatsoever,  taken  and  detained 
from  the  owner  thereof,  and  secreted  or  withheld,  so  that  the  same  can- 
not be  replevied.  And  the  same  point  was  decided  in  Clapp  v.  Shep- 
hard,  23  Pick.  228.  In  a  former  statute  (St.  1823,  c.  140),  there  was  a 
similar  provision  which  extended  expressly  to  "any  goods  or  chattels, 
deed,  bond,  note,  bill,  specialty,  writing,  or  other  personal  property." 
And  the  learned  commissioners,  in  a  note  on  the  Rev.  St.  c.  81,  §  8. 
say  that  the  words  "  'goods  or  chattels'  arc  supposed  to  comprehend  the 
several  particulars  immediately  following  them  in  St.  1823,  c.  140,  as 
well  as  many  others  that  are  not  mentioned." 

The  word  "chattels"  is  not  contained  in  the  provision  of  the  statute 
of  frauds  ;  but  personal  chattels  are  movable  goods,  and  so  far  as 
these  words  may  relate  to  the  question  under  consideration  they  seem 
to  have  the  same  meaning.  But  however  this  may  be,  we  think  the 
present  case  cannot  be  distinguished  in  principle  from  Tisdale  v.  liar- 


94  REQUIRED   TO    BE    IN    WRITING 

ris;  and  upon  the  authority  of  that  case,  taking  into  consideration 
again  the  reasons  and  principles  on  which  it  was  decided,  we  are  of 
opinion  that  the  contract  in  question  is  within  the  statute  of  frauds, 
and  consequently  that  the  motion  to  set  aside  the  nonsuit  must  be  over- 
ruled. 


I  ^/  HEINTZ  et  al.  v.  BURKHARD. 

(Supreme  Court  of  Oregon,  1S96.     29  Or.  55,  43  Pac.  8GG,  31  L.  R.  A.  508, 

54  Am.   St.  Rep.  777.) 

Action  by  A.  R.  Heintz  &  Co.  against  Joseph  Burkhard.  From  a 
judigment  of  nonsuit,  plaintiffs  appeal. 

Bean,  C.  J.  This  action  was  brought  to  recover  damages  for  the 
breach  of  a  contract  to  furnish  the  ironwork  for  defendant's  building, 
and  comes  here  on  an  appeal  from  a  judgment  of  nonsuit.  For  the 
purposes  of  this  appeal,  it  is  sufficient  to  say  that  the  evidence  tended 
to  show  that  in  August,  1894,  the  plaintiff  and  defendant  entered  into 
an  oral  contract,  by  the  terms  of  which  the  plaintiff  was  to  manufac- 
ture, and  furnish  to  the  defendant,  the  ironwork  for  a  brick  building 
about  to  be  erected  by  him,  according  to  certain  plans  and  specifica- 
tions, for  thejum  of  $2,825,  but  that  defendant  subsequently,  and  be- 
fore any  work  was~performed,  wrongfully  refused  to  allow  plaintiff 
to  proceed  with  the  execution  of  its  contract.  The^ironwork  referred 
to  was  not  to  be  of  the  kind  manufactured  by  the  plaintiff  in  the  usual 
cdufse^oJ  businessTbr  for  fhe  tracie,"buT  of  special  designs  and  rneas- 

urements  suitable  only  for  use  in  the  construction  of  defendant's  build- 

ing.  The  court  below  ruled  that  the  contract  was  "an  agreement  for 
the  sale  of  personal  property,"  within  the  meaning  of  subdivision  5, 
§  785,  of  Hill's  Annotated  Laws,  and  void  because  not  in  writing,  and 
this  ruling  presents  the  only  question  to  be  determined  on  this  appeal. 

To  determine  whether  a  given  contract  concerning  personal  prop- 
erty, which  dbes  not  exist  in  specie  at  the  time  it  is  entered  into,  but 
must  be  manufactured  and  brought  into  being  under  the  contract,  comes 
within  the  statute  of  frauds,  is  not  without  difficulty,  and  the  decisions 
are  by  no  means  reconcilable.  The  chief  difficulty  in  all  such  cases  is 
encountered  in  determining  when  the  contract  is  substantially  for  the 
sale  of  personal  property,  to  be  executed  in  the  future,  and  when  for 
work  and  labor  and  material  only.  If  the  former,  it  is  within  the  stat- 
ute. If  the  latter,  it  is  not.  Thus  far  the  authorities,  except  in  the 
state  of  New  York,  are  substantially  agreed ;  but  there  have  been  nu- 
merous decisions,  and  much  diversity  and  even  conflict  of  opinion,  in 
relation  to  a  proper  rule  by  which  to  determine  whether  a  contract  is 
in  fact  for  the  sale  of  personal  property,  and  therefore  within  the 
statute,  or  for  work  and  labor  and  material  furnished,  and  so  without 
the  statute. 


CONTRACTS   WITHIN   SECTION   17  95 

There  appear  to  be  substantially  three  distinct  views  upon  the  statute, 
which,  for  convenience,  are  generally  designated  as  the  English,  the 
NewYqrk,  and  the  Massachusetts  rules,  as  represented  by  the  deci- 
sions of  their  respective  courts.  In  England,  after  a  long  series  of 
cases  in  which  various  tests  have  been  suggested,  the  rule  seems  to 
have  been  settled  in  Lee  v.  Griffin,  1  Best  &  S.  272,  that  "if  the  con- 
tract be  such  that,  when  carried  out,  it  would  result  in  the  sale  of  a 
chattel,  the  party  cannot  sue  for  work  and  labor ;  but,  if  the  result  of 
the  contract  is  that  the  party  has  done  work  and  labor  which  ends  in 
nothing  that  can  become  the  subject  of  a  sale,  the  party  cannot  sue  for 
goods  sold  and  delivered."  In  that  case  the  action  was  brought  by  a 
dentist  to  recover  £21  for  two  sets  of  artificial  teeth  made  for  the  de- 
fendant's testatrix.  The  court  held  the  contract  to  be  for  the  sale  of 
chattels,  and  within  the  statute.  But  this  decision  seems  to  stand  alone,, 
and  is  in  direct  conflict  with  the  previous  decisions  of  the  English 
courts.  Towers  v.  Osborne,  1  Strange,  506;  Clayton  v.  Andrews,  4 
Burrows,  2101 ;  Rondeau  v.  \Yyatt,  2  H.  Bl.  63 ;  Cooper  v.  Elston, 
7  Term  R.  14;  Groves  v.  Buck,  3  Maule  &  S.  178;  Garbutt  v.  Wat- 
son, 5  Barn.  &  Aid.  613 ;  Smith  v.  Surman,  9  Barn.  &  C.  574.  It  is 
said  to  have  been  the  result  of  Lord  Tenterden's  act,  which  expressly 
extended  the  statute  to. all  contracts  of  sale,  notwithstanding  the  goods 
"may  not  at  the  time  of  such  contract  be  actually  made,  procured  or 
produced  or  fit  or  ready  for  delivery,  or  some  act  may  be  required!  for 
the  making  or  completing  thereof  to  render  the  same  fit  for  delivepy." 
Meincke  v.  Falk,  55  Wis.  432,  13  N.  W.  545,  42  Am.  Rep.  722;  Benj. 
Sales  (6th  Ed.)  108. 

In  this  condition  of  the  English  authorities,  we  are  not  prepared  to 
go  to  the  full  extent  of  Lee  v.  Griffin.  It  is  an  extreme  case,  and,  un- 
less the  decision  was  made  to  conform  to  Lord  Tenterden's  act,  it  antag- 
onizes the  opinions  of  some  of  the  most  eminent  jurists  of  England, 
and  is  open  to  the  objection  that  it  practically  permits  the  fraud  which 
theoretically  the  statute  seeks  to  prevent.  To  say  that  a  contract  of  a 
dentist  to  manufacture  and  furnish  a  set  of  false  teeth  for  his  customer 
is  "an  agreement  for  the  sale  of  personal  property,"  within  the  mean- 
ing of  the  statute,  is  certainly  giving  it  the  widest  possible  operation, 
and  has  not  found  general  recognition  in  this  country,  as  a  correct 
exposition  of  the  doctrine,  although  the  simplicity  of  the  rule  has  com- 
mended it  to  many  of  the  judges. 

In  New  York  the  rule  prevails  that  a  contract  concerning  personal 
property  not  existing  in  solidp  at  the  time  of  the  contract,  but  which 
the  vendor  is  to  manufacture  or  put  in  condition  for  delivery,  such  as 
the  woodwork  for  a  wagon,  or  wheat  not  yet  threshed,  or  nails  to  be 
made  from  iron  belonging  to  the  manufacturer,  and  the  like,  is  not 
within  the  statute.  Crookshank  v.  Burrcll,  18  Johns.  58,  9  Am.  Dec. 
187;  Downs  v.  Ross,  23  Wend.  270;  Sewall  v.  Fitch.  8  Cow.  215; 
Parsons  v.  Loucks,  48  N.  Y.  17,  8  Am.  Rep.  517;   Couke  v.  Millard, 


96  REQUIRED   TO   BE   IN   WRITING 

65  N.  Y.  352,  22  Am.  Rep.  619;   Hi-gins  v.  Murray,  73  N.  Y.  252. 
But  this  rule  seems  to  be  peculiar  to  that  state. 

By  the  Massachusetts  rule  the  test  is  not  the  existence  or  nonexist- 
ence of  the  commodity  at  the  time  of  the  contract,  as  in  New  York,  or 
whether  the  contract  will  ultimately  result  in  the  transfer  of  the  title 
of  a  chattel  from  the  vendor  to  the  vendee,  as  in  England,  but  wheth- 
er the  article  is  such  as  the  manufacturer  ordinarily  produces  in  the 
course  of  business,  and  for  the  trade,  or  as  the  result  of  a  special  or- 
der, and  for  special  purposes.  If  the  former,  it  is  regarded  as  a  con- 
tract of  sale,  and  within  the  statute.  If  the  latter,  it  is  held  to  be  es- 
sentially a  contract  for  labor  and  material,  and  therefore  not  within 
the  statute.  Thus,  it  is  held  that  an  agreement  to  build  a  carriage  of 
a  certain  design  is  not  within  the  statute  (Mixer  v.  Howarth,  21  Pick. 
205,  32  Am.  Dec.  256),  but  that  a  contract  to  buy  a  certain  number  of 
boxes  of  candles  at  a  fixed  price,  which  the  vendor  said  he  would  there- 
after finish  and  deliver,  is  a  contract  of  sale,  to  which  the  statute  ap- 
plies. Gardner  v.  Joy,  9  Mete.  177.  The  result  of  the  decisions  in  that 
state  has  recently  been  stated  thus :  "A  contract  for  the  sale  of  articles 
then  existing,  or  such  as  the  vendor,  in  the  ordinary  course  of  his  busi- 
ness, manufactures  or  procures  for  the  general  market,  whether  on 
hand  at  the  time  or  not,  is  a  contract  for  the  sale  of  goods,  to  which 
the  statute  applies.  But,  on  the  other  hand,  if  the  goods  are  to  be 
manufactured  especially  for  the  purchaser,  and  upon  his  special  order, 
and  not  for  the  general  market,  the  case  is  not  within  the  statute." 
Ames,  J.,  in  Goddard  v.  Binney,  115  Mass.  450,  15  Am.  Rep.  112. 
And  this  doctrine  seems  to  be  the  one  most  widely  adopted  in  this 
country. 

As  to  the  latter  part  of  the  rule,  relating  to  goods  made  on  special 
orders,  there  is  little  if  any  conflict  in  the  American  cases.  Baker, 
Sales,  §  96;  2  Schouler,  Pers.  Prop.  §  443;  Browne,  St.  Frauds,  §  308; 
8  Am.&  Eng.  Enc.  Law,  707  ;  note  to  Flynn  v.  Dougherty,  14  L.  R.  A. 
230;  Meincke  v.  Falk,  55  Wis.  427,  13  N.  W.  545,  42  Am.  Rep.  722; 
Finney  v.  Apgar,  31  N.  J.  Law,  266;  Phipps  v.  McFarlane,  3  Minn.  109 
(Gil.  61),  74  Am.  Dec.  743;  Hight  v.  Ripley,  19  Me.  137;  Cason  v. 
Cheely,  6  Ga.  554;  Abbott  v.  Gilchrist,  38  Me.  260.  Until  legislation 
shall  assert  itself  more  positively,  the  courts  are  put  to  their  election 
as  between  these  three  rules,  which,  though  each  has  its  own  merits, 
are  not  to  be  reconciled  with  one  another.  In  the  absence  of  a  statute 
substantially  the  same  as  Lord  Tenterden's  act,  we  are-unwilling  to  go- 
to the  extent  of  the  doctrine  of  Lee  v.  Griffin ;  and  in  this  case  it  is 
unnecessary  for  us  to  give  a  preference  to  either  the  New  York  or 
Massachusetts  rule,  because  the  contract  in  question  is  valid  under 
either.  It  would  be  excluded  from  the  operation  of  the  statute  by  the 
rule  adopted  in  New  York,  because  the  subject-matter  of  the  contract 
did  not  exist  in  solido,  or  at  all,  at  the  time  it  was  made ;  and  it'  is  not 
within  the  statute  under  the  Massachusetts  rule  and  the  generally 


CONTRACTS    WITHIN   SECTION   17  97 

accepted  American  doctrine,  because  the  ironwork  was  to  be  manufac- 
tured especially  for  the  defendant,  and  upon  his  special  order,  ac- 
cording to  a  particular  design,  and  was  not  such  as  the  plaintiffs,  in 
the  ordinary  course  of  their  business,  manufactured  for  the  general 
trade. 

It  follows  that  under  either  view  the  court  below  was  in  error  in 
holding  that  the  contract  was  void  because  not  in  writing.  The  judg- 
ment must  therefore  be  reversed,  and  a  new  trial  ordered. 


2.  Acceptance  and  Receipt 


KEMENSKY  v.  CHAPIN  et  al. 

(Supreme  Judicial  Court  of  Massachusetts,  1907.     193  Mass.  500, 
79  N.   E.  781,  9  Ann.   Cas.   1168.) 

Action  by  one  Kemensky  against  one  Chapin  and  others.  Judgment 
for  defendants,  and  plaintiff  excepts. 

Braley,  J.  Independently  of  Rev.  Laws,  c.  74,  §  5,  which  makes 
unenforceable  a  contract  for  the  sale  of  goods  for  $50  or  more  where 
there  is  neither  a  memorandum  in  writing  nor  a  partial  payment  of  the 
price,  unless  the  purchaser  receives  and  accepts  a  part  of  the  goods 
sold,  it  became  a  question  of  fact  whether  the  onions  which  the  plain- 
tiff delivered  corresponded  in  size  and  quality  with  those  shown  by  the 
sample.  Townsend  v.  Hargraves,  118  Mass.  325,  332;  McLean  v. 
Richardson,  127  Mass.  339;  Obery  v.  Lander,  179  Mass.  131,  60  N. 
E.  378. 

But  if  upon  this  issue  the  verdict  might  have  been  in  his  favor,  as 
the  statute  of  frauds  had  been  pleaded,  the  plaintiff,  before  he  could 
recover,  was  obliged  to  offer  some  evidence  whicli  tended  to  show  an 
acceptance  by  the  defendants.  Snow  v.  Warner,  10  Aletc.  132,  137, 
138,  43  Am.  Dec.  417;  Davis  v.  Eastman,  1  Allen,  422;  Goddard  v. 
Einney,  115  Mass.  450,  456,  15  Am.  Rep.  112;  Safford  v.  McDonough, 
120  Mass.  290.  His  argument  that  this  proof  was  unnecessary  as  the 
correspondence  prior  to  delivery,  when  taken  in  connection  with  the 
shipping  receipt,  constituted  a  sufficient  memorandum  to  satisfy  the 
statute,  fails,  because  these  papers  are  silent  as  to  the  essential  ele- 
ment of  price.  Waterman  v.  Meigs,  4  Cush.  497;  Smith  v.  Colby, 
136  Mass.  562. 

By  the  terms  of  sale,  which  for  the  purposes  of  these  exceptions  must 
be  taken  as  stated  by  the  plaintiff,  although  the  delivery  to  the  railroad 
company  selected  by  them  was  a  delivery  to  the  defendants,  yet  as  the 
carrier  was  authorized  only  to  receive  the  onions  for  transportation 

TirEOCKM.CONT. — 7 


98  EEQUIRED   TO   BE   IN   WRITING 

there  was  no  express  or  implied  authority  conferred  to  accept,  and  un- 
der such  conditions  mere  delivery  does  not  constitute  an  acceptance. 
Johnson  v.  Cuttle,  105  Mass.  447,  7  Am.  Rep.  545 ;  Atherton  v.  New- 
hall,  123  Mass.  141,  25  Am.  Rep.  47.  Compare  Strong  v.  Dodds,  47 
Vt.  348. 

In  Remick  v.  Sandford,  120  Mass.  309,  316,  it  is  said:  "If  the  buyer 
accepts  the  goods  as  those  which  he  purchased,  he  may  afterwards  re- 
ject them  if  they  are  not  what  they  were  warranted  to  be,  but  the 
statute  is  satisfied."  See,  also,  Frostburg  Mining  Co.  v.  New  England 
Glass  Co.,  9  Cush.  115.  If  there  was  a  transfer  of  possession  not  only 
to  the  carrier,  but  subsequently  by  the  actual  receipt  of  the  car  and  its 
contents  by  the  defendants  at  their  place  of  business,  this  transfer  can- 
not be  treated  as  constituting  an  acceptance ;  which  means  an  assent 
by  the  buyer  as  owner  to  take,  in  whole  or  in  part,  the  merchandise 
delivered  as  being  that  for  which  he  bargained.  To  determine  this 
question  the  ordinary  test  is  whether  the  conduct  of  the  buyer  in  deal- 
ing with  the  goods  is  such  as  fairly  to  indicate  an  assertion  of  owner- 
ship, and  where  the  sale  is  upon  an  express  or  implied  warranty  an 
examination  at  the  time  of  delivery,  and  nothing  more,  is  insufficient. 
Remick  v.  Sandford,  ubi  supra. 

Under  the  terms  of  sale  the  parties  contemplated  that  at  some  period 
the  defendants  should  have  an  opportunity  to  ascertain  if  in  bulk  the 
onions  corresponded  with  those  shown  in  the  sample.  Upon  the  ar- 
rival of  the  car  this  right  was  exercised,  but  the  examination  being  for 
this  specific  purpose  could  not  be  deemed  an  act  of  acceptance.  Rem- 
ick V.  Sandford,  ubi  supra;'  Taylor  v.  Smith,  L.  R.  2  Q.  B.  65,  71 
(1893).  See,  also,  Devine  v.  Warner,  75  Conn.  375,  380,  53  Atl.  782, 
96  Am.  St.  Rep.  211 ;  Lloyd  v.  Wright,  25  Ga.  215 ;  Jones  v.  Mechan- 
ics' Bank,  29  Md.  287,  96  Am.  Dec.  533 ;  Hewes  v.  Jordan,  39  Md.  472, 
17  Am.  Rep.  578 ;  Maxv.^ell  v.  Brown,  39  Me.  98,  63  Am.  Dec.  605 ;  Ed- 
wards V.  Grand  Trunk  R.  R.,  48  Me.  379,  381 ;  Smith  v.  Brennan,  62 
Mich.  349,  28  N.  W.  892,  4  Am.  St.  Rep.  867 ;  Fontaine  v.  Bush,  40 
Minn.  141,  41  N.  W.  465,  12  Am.  St.  Rep.  722;  Clark  v.  Labreche,  63 
N.  H.  397;  Shindler  v.  Houston,  1  N.  Y.  261,  269,  49  Am.  Dec.  316; 
Stone  V.  Browning,  51  N.  Y.  211 ;  Id.,  68  N.  Y.  598;  Cooke  v.  Millard, 
65  N.  Y.  368,  22  Am.  Rep.  619;  Gibbs  v.  Benjamin,  45  Vt.  124;  Hill 
V.  McDonald,  17  Wis.  97,  100;  Bacon  v.  Eccles,  43  Wis.  227,  237; 
Browne,  Statute  of  Frauds  (5th  Ed.)  §  316,  a-c;  Benjamin  on  Sales 
(5th  Ed.)  214. 

After  examination  the  defendants  declined  to  accept,  and  immediate- 
ly notified  the  plaintiff  by  letter  stating  their  reasons,  and  while  the 
jury  could  have  found  that  in  fact  these  reasons  were  unfounded,  such 
a  finding  would  have  been  inconclusive,  as  under  the  statute  the  buyer 
is  at  liberty  to  refuse,  even  if  his  action  could  be  found  to  have  been 
arbitrary  and  wholly  unreasonable. 

The  defendants  acted  solely  within  their  rights,  even  if  all  the  bags 


CONTRACTS    WITHIN   SECTION    17  99 

were  opened  for  the  purpose  of  inspecting  the  contents  of  each,  as  in 
no  other  satisfactory  way  could  a  comparison  be  made  between  the 
sample  and  the  consignment  received.  Up  to  this  point,  therefore,  there 
had  been  no  assumption  of  ownership  sufficient  to  satisfy  the  statute. 
Knight  V.  Mann,  118  Mass.  143:  Remick  v.  Sandford,  ubi  supra.  By 
directing  the  transfer  of  the  car  to  the  general  yard  of  the  railroad, 
after  their  notice  to  the  plaintiff  they  did  not  exercise  any  dominion 
as  owners  over  its  contents,  as  they  were  only  taking  the  steps  usually 
required  to  indicate  positively  that  they  declined  to  accept  and  that 
thereafter  the  onions  were  subject  to  the  plaintiff's  disposal.  Atherton 
V.  Newhall,  ubi  supra.  Dorr  v.  Fisher,  1  Cush.  271,  279;  Douglass 
Axe  Mfg.  Co.  V.  Gardner,  10  Cush.  88,  90;  Cox  v.  Wiley,  183  Mass. 
410,  412,  67  N.  E.  367. 

The  case  appears  to  be  one  of  peculiar  hardship  to  the  plaintiff,  but 
as  the  unequivocal  acts  of  the  defendants  are  insufficient  to  show  ac- 
ceptance, a  verdict  in  their  favor  was  rightly  ordered.  Remick  v. 
Sandford,  120  Mass.  309;  Knight  v.  Mann,  118  Mass.  143;  Atherton 
v.  Newhall,  123  Mass.  141,  25  Am.  Rep.  47;  Denny  v.  Williams,  5  Al- 
len, 1;  Howard  v.  Borden,  13  Allen,  299,  300;  Stone  v.  Browning, 
51  N.  Y.  211 ;  Id.,  68  N.  Y.  598.    Exceptions  overruled. 


100  CONSIDERATION 

CONSIDERATION 
I.  Consideration  Defined  * 


HAMER  V.  SIDWAY. 

(Court  of  Appeals  of  New  York,  1891.     124  N.  Y.  538,  27  N.  B.  256, 
12    L.    R.    A.    463,    21    Am.    St.    Rep.    693.) 

Appeal  from  an  order  of  the  general  term  of  the  supreme  court  in 
the  fourth  judicial  department,  reversing  a  judgment  entered  on  the 
decision  of  the  court  at  special  term  in  the  county  clerk's  office  of 
Chemung  county  on  the  1st  day  of  October,  1889.  The  plaintiff  pre- 
sented a  claim  to  the  executor  of  William  E.  Story,  Sr.,  for  $5,000 
and  interest  from  the  6th  day  of  February,  1875.  She  acquired  it 
through  several  mesne  assignments  from  William  E.  Story,  2d.  The 
claim  being  rejected  by  the  executor,  this  action  was  brought.  It 
appears  that  William  E.  Story,  Sr.,  was  the  uncle  of  William  E.  Story, 
2d;  that  at  the  celebration  of  the  golden  wedding  of  Samuel  Story 
and  wife,  father  and  mother  of  William  E.  Story,  Sr.,  on  the  20th  day 
of  March,  1869,  in  the  presence  of  the  family  and  invited  guests,  he 
promised  his  nephew  that  if  he  would  refrain  from  drinking,  using 
tobacco,  swearing,  and  playing  cards  or  billiards  for  money  until  he 
became  21  years  of  age,  he  would  pay  him  the  sum  of  $5,000.  The 
nephew  assented  thereto,  and  fully  performed  the  conditions  inducing 
the  promise. 

Parker,  J.^  (after  stating  the  facts  as  above.)  The  question  which 
provoked  the  most  discussion  by  counsel  on  this  appeal,  and  which  lies 
at  the  foundation  of  plaintiff's  asserted  right  of  recovery,  is  whether 
by  virtue  of  a  contract  defendant's  testator,  William  E.  Story,  became 
indebted  to  his  nephew,  William  E.  Story,  2d,  on  his  twenty-first  birth- 
day in  the  sum  of  $5,000.  The  trial  court  found  as  a  fact  that  "on  the 
20th  day  of  March,  1869,  *  *  *  William  E.  Story  agreed  to  and 
with  William  E.  Story,  2d,  that  if  he  would  refrain  from  drinking 
liquor,  using  tobacco,  swearing,  and  playing  cards  or  billiards  for  mon- 
ey until  he  should  become  twenty-one  years  of  age,  then  he,  the  said 
William  E.  Story,  would  at  that  time  pay  him,  the  said  William  E. 
Story,  2d,  the  sum  of  $5,000  for  such  refraining,  to  which  the  said 
William  E.  Story,  2d,  agreed,"  and  that  he  "in  all  things  fully  per- 
formed his  part  of  said  agreement." 

■   1  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)   §§  61,  62. 
«•  The  statement  of  facts  is  abridged  and  a  portion  of  the  opinion  omitted. 


CONSIDERATION    DEFINED  101 

The  defendant  contends  that  the  contract  was  without  consideration 
to  support  it,  and  therefore  invalid.  He  asserts  that  the  promisee,  by 
refraining  from  the  use  of  liquor  and  tobacco,  was  not  harmed,  but 
benefited;  that  that  which  he  did  was  best  for  him  to  do,  independ- 
ently of  his  uncle's  promise, — and  insists  that  it  follows  that,  unless 
the  promisor  was  benefited,  the  contract  was  without  consideration, — 
a  contention  which,  if  well  founded,  would  seem  to  leave  open  for 
controversy  in  many  cases  whether  that  which  the  promisee  did  or 
omitted  to  do  was  in  fact  of  such  benefit  to  him  as  to  leave  no  con- 
sideration to  support  the  enforcement  of  the  promisor's  agreement. 

Such  a  rule  could  not  be  tolerated,  and  is  without  foundation  in  the 
law.  The  exchequer  chamber  in  1875  defined  "consideration"  as  fol- 
lows :  "A  valuable  consideration,  in  the  sense  of  the  law,  may  con- 
sist either  in  some  right,  interest,  profit,  or  benefit  accruing  to  the  one 
party,  or  some  forbearance,  detriment,  loss,  or  responsibility  given, 
suffered,  or  undertaken  by  the  other."  Courts  "will  not  ask  whether 
the  thing  which  forms  the  consideration  does  in  fact  benefit  the  prom- 
isee or  a  third  party,  or  is  of  any  substantial  value  to  any  one.  It  is 
enough  that  something  is  promised,  done,  forborne,  or  suffered  by  the 
party  to  whom  the  promise  is  made  as  consideration  for  the  promise 
made  to  him."  Anson,  Cont.  63.  "In  general  a  waiver  of  any  legal 
right  at  the  request  of  another  party  is  a  sufficient  consideration  for  a 
promise."  Pars.  Cont.  *444.  "Any  damage,  or  suspension,  or  for- 
bearance of  a  right  will  be  sufficient  to  sustain  a  promise."  2  Kent, 
Comm.  (12th  Ed.)  *465.  Pollock  in  his  work  on  Contracts,  (page 
166,)  after  citing  the  definition  given  by  the  exchequer  chamber,  al- 
ready quoted,  says:  "The  second  branch  of  this  judicial  description 
is  really  the  most  important  one.  'Consideration'  means  not  so  much 
that  one  party  is  profiting  as  that  the  other  abandons  some  legal  right 
in  the  present,  or  limits  his  legal  freedom  of  action  in  the  future,  as  an 
inducement  for  the  promise  of  the  first." 

Now,  applying  this  rule  to  the  facts  before  us,  the  promisee  used 
tobacco,  occasionally  drank  liquor,  and  he  had  a  legal  right  to  do  so. 
That  right  he  abandoned  for  a  period  of  years  upon  the  strength  of 
the  promise  of  the  testator  that  for  such  forbearance  he  would  give 
him  $5,000.  We  need  not  speculate  on  the  eft'ort  which  may  have  been 
required  to  give  up  the  use  of  those  stimulants.  It  is  sufficient  that  he 
restricted  his  lawful  freedom  of  action  within  certain  prescribed  lim- 
its upon  the  faith  of  his  uncle's  agreement,  and  now  having  fully  per- 
formed the  conditions  imposed,  it  is  of  no  moment  whether  such  per- 
formance actually  proved  a  benefit  to  the  promisor,  and  the  court  will 
not  inquire  into  it;  but,  were  it  a  proper  subject  of  inquiry,  we  see 
nothing  in  this  record  that  would  permit  a  determination  that  tlie 
uncle  was  not  benefited  in  a  legal  sense. 

Few  cases  have  been  found  which  may  be  said  to  be  precisi^ly  in 
point,  but  such  as  have  been  suj^port  the  position  wc  have  taken.     In 


102  CONSIDERATION 

Shadwell  v.  Sliadwell,  9  C.  B.  (N.  S.)  159,  an  uncle  wrote  to  his 
nephew  as  follows:  "My  dear  Lancey:  I  am  so  glad  to  hear  of  your 
intended  marriage  with  Ellen  Nicholl,  and,  as  I  promised  to  assist  you 
at  starting,  I  am  happy  to  tell  you  that  I  will  pay  you  150  pounds 
yearly  during  my  life  and  until  your  annual  income  derived  from  your 
profession  of  a  chancery  barrister  shall  amount  to  600  guineas,  of 
which  your  own  admission  will  be  the  only  evidence  that  I  shall  re- 
ceive or  require.  Your  affectionate  uncle,  Charles  Shadwell."  It  was 
held  that  the  promise  was  binding,  and  made  upon  good  consideration. 
In  Lakota  v.  Newton,  (an  unreported  case  in  the  superior  court  of 
Worcester,  Mass.,)  the  complaint  averred  defendant's  promise  that  "if 
you  [meaning  the  plaintiff]  will  leave  off  drinking  for  a  year  I  will 
give  you  $100,"  plaintiff''s  assent  thereto,  performance  of  the  condition 
by  him,  and  demanded  judgment  therefor.  Defendant  demurred,  on 
the  ground,  among  others,  that  the  plaintiff's  declaration  did  not  al- 
lege a  valid  and  sufficient  consideration  for  the  agreement  of  the  de- 
fendant. The  demurrer  was  overruled.  In  Talbott  v.  Stemmons,  89 
Ky.  222,  12  S.  W.  297,  5  L.  R.  A.  856,  25  Am.  St.  Rep.  531,  the 
step-grandmother  of  the  plaintiff*  made  with  him  the  following  agree- 
ment: "I  do  promise  and  bind  myself  to  give  my  grandson  Albert  R. 
Talbott  $500  at  my  death  if  he  will  never  take  another  chew  of  to- 
bacco or  smoke  another  cigar  during  my  life,  from  this  date  up  to  my 
death ;  and  if  he  breaks  this  pledge  he  is  to  refund  double  the  amount 
to  his  mother."  The  executor  of  Mrs.  Stemmons  demurred  to  the 
complaint  on  the  ground  that  the  agreement  was  not  based  on  a  suffi- 
cient consideration.  The  demurrer  was  sustained,  and  an  appeal  taken 
therefrom  to  the  court  of  appeals,  where  the  decision  of  the  court 
below  was  reversed.  In  the  opinion  of  the  court  it  is  said  that  "the 
right  to  use  and  enjoy  the  use  of  tobacco  was  a  right  that  belonged  to 
the  plaintiff,  and  not  forbidden  by  law.  The  abandonment  of  its  use 
may  have  saved  him  money,  or  contributed  to  his  health ;  nevertheless, 
the  surrender  of  that  right  caused  the  promise,  and,  having  the  right 
to  contract  with  reference  to  the  subject-matter,  the  abandonment  of 
the  use  was  a  sufficient  consideration  to  uphold  the  promise."  Ab- 
stinence from  the  use  of  intoxicating  liquors  was  held  to  furnish  a 
good  consideration  for  a  promissory  note  in  Lindell  v.  Rokes,  60  Mo. 
249,  21  Am.  Rep.  395. 

The  cases  cited  by  the  defendant  on  this  question  are  not  in  point. 
In  Mallory  v.  Gillett,  21  N.  Y.  412,  Belknap  v.  Bender,  75  N.  Y.  446, 
31  Am.  Rep.  476,  and  Berry  v.  Brown,  107  N.  Y.  659,  14  N.  E.  289, 
the  promise  was  in  contravention  of  that  provision  of  the  statute  of 
frauds  which  declares  void  all  promises  to  answer  for  the  debts  of 
third  persons  unless  reduced  to  writing.  In  Beaumont  v.  Reeve,  Shir. 
Lead.  Cas.  7,  and  Porterfield  v.  Butler,  47  Miss.  165,  12  Am.  Rep. 
329,  the  question  was  whether  a  moral  obligation  furnishes  suf- 
ficient consideration   to  uphold  a   subsequent   express  promise.     In 


ADEQUACY   OF   CONSIDERATION  103 

Duvoll  V.  Wilson,  9  Barb.  487,  and  Wilbur  v.  Warren,  104  N.  Y. 
192,  10  N.  E.  263,  the  proposition  involved  was  whether  an  ex- 
ecutory covenant  against  incumbrances  in  a  deed  given  in  consider- 
ation of  natural  love  and  affection  could  be  enforced.  In  Vander- 
bilt  V.  Schreyer,  91  N.  Y.  392,  the  plaintiff  contracted  with  defend- 
ant to  build  a  house,  agreeing  to  accept  in  part  payment  therefor 
a  specific  bond  and  mortgage.  Afterwards  he  refused  to  finish  his 
contract  unless  the  defendant  would  guaranty  its  payment,  which  was 
done.  It  was  held  that  the  guaranty  could  not  be  enforced  for  want 
of  consideration ;  for  in  building  the  house  the  plaintiff  only  did  that 
which  he  had  contracted  to  do.  And  in  Robinson  v.  Jewett,  116  N. 
Y.  40,  22  N.  E.  224,  the  court  simply  held  that  "the  performance  of" 
an  act  which  the  party  is  under  a  legal  obligation  to  perform  cannot 
constitute  a  consideration  for  a  new  contract."     ♦     *     ♦ 


II.  Necessity  for  Consideration  • 


See  Rann  v.  Hughes,  supra,  page  34. 


III.  Adequacy  of  Consideration  * 


SCHNELL  V.  NELIv. 

(Supreme   Court   of   Indiana,    1S61.     17   Ind.   20,   79   Am.    Dec.   433.) 

Perkins,  J.  Action  by  J.  B.  Nell  against  Zacharias  Schnell,  upon 
the  following  instrument : 

"This  agreement,  entered  into  this  13th  day  of  February,  1856,  be- 
tween Zach.  Schnell,  of  Indianapolis,  Marion  county,  state  of  Indi- 
ana, as  party  of  the  first  part,  and  J.  B.  Nell,  of  the  same  place,  Wen- 
delin  Lorenz,  of  Stilesville,  Hendricks  county,  state  of  Indiana,  and 
Donata  Lorenz,  of  Frickinger,  Grand  Duchy  of  Baden,  Germany, 
as  parties  of  the  second  i)art,  witnesscth :  The  said  Zacharias 
Schnell  agrees  as  follows:  Whereas  his  wife,  Theresa  Schnell,  now 
deceased,  has  made  a  last  will  and  testament  in  which,  among  oth- 
er provisions,  it  was  ordained  that  every  one  of  the  above-named 
second  parties,  should  receive  the  sum  of  $200;  and  whereas  the 
said   provisions   of   the   will   must    remain   a   nullity,    for   the   reason 

3  Tor  discussion  of  principles,  see  Clnik  on  Contr:iota  f2d  I'M.)  i5  (VJ. 
*  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Kd.)  §§  05,  CO. 


104  CONSIDERATION 

that  no  property,  real  or  personal,  was  in  the  possession  of  the  said 
Theresa  Schnell,  deceased,  in  her  own  name,  at  the  time  of  her  death, 
and  all  property  held  by  Zacharias  and  Theresa  Schnell  jointly,  there- 
fore reverts  to  her  husband;  and  whereas  the  said  Theresa  Schnell 
has  also  been  a  dutiful  and  loving  wife  to  the  said  Zach.  Schnell,  and 
has  materially  aided  him  in  the  acquisition  of  all  property,  real  and 
personal,  now  possessed  by  him;  for,  and  in  consideration  of  all  this, 
and  the  love  and  respect  he  bears  to  his  wife;  and,  furthermore,  in 
consideration  of  one  cent,  received  by  him  of  the  second  parties,  he, 
the  said  Zach.  Schnell,  agrees  to  pay  the 'above  named  sums  of  money 
to  the  parties  of  the  second  part,  to  wit :  $200  to  the  said  J.  B.  Nell ; 
$200  to  the  said  Wendelin  Lorenz ;  and  $200  to  the  said  Donata  Lor- 
enz,  in  the  following  installments,  viz.,  $200  in  one  year  from  the  date 
of  these  presents ;  $200  in  two  years ;  and  $200  in  three  years ;  to  be 
divided  between  the  parties  in  equal  portions  of  $66%  each  year,  or 
as  they  may  agree,  till  each  one  has  received  his  full  sum  of  $200. 
And  the  said  parties  of  the  second  part,  for,  and  in  consideration  of 
this,  agree  to  pay  the  above  named  sum  of  money  (one  cent),  and  to 
deliver  up  to  said  Schnell,  and  abstain  from  collecting  any  real  or 
supposed  claims  upon  him  or  his  estate,  arising  from  the  said  last  will 
and  testament  of  the  said  Theresa  Schnell,  deceased.  In  witness 
whceof,  the  said  parties  have,  on  this  13th  day  of  February,  1856, 
set  hereunto  their  hands  and  seals.  Zacharias  Schnell.  [Seal.-  J.  B. 
Nell.   [Seal.]     Wen.  Lorenz.   [Seal.]" 

The  complaint  contained  no  averment  of  a  consideration  for  the  in- 
strument, outside  of  those  expressed  in  it;  and  did  not  aver  that  the 
one  cent  agreed  to  be  paid,  had  been  paid  or  tendered. 

A  demurrer  to  the  complaint  was  overruled. 

The  defendant  answered,  that  the  instrument  sued  on  was  given  for 
no  consideration  whatever. 

He  further  answered,  that  it  was  given  for  no  consideration,  be- 
cause his  said  wife,  Theresa,  at  the  time  she  made  the  will  mentioned, 
and  at  the  time  of  her  death,  owned,  neither  separately,  nor  jointly 
with  her  husband,  or  any  one  else  (except  so  far  as  the  law  gave  her 
an  interest  in  her  husband's  property),  any  property,  real  or  person- 
al, etc. 

The  will  is  copied  into  the  record,  but  need  not  be  into  this  opinion. 

The  court  sustained  a  demurrer  to  these  answers,  evidently  on  the 
ground  that  they  were  regarded  as  contradicting  the  instrument  sued 
on,  which  particularly  set  out  the  considerations  upon  which  it  was 
executed.  But  the  instrument  is  latently  ambiguous  on  this  point. 
See  Ind.  Dig.  p.  110. 

The  case  turned  below,  and  must  turn  here,  upon  the  question 
whether  the  instrument  sued  on  does  express  a  consideration  suf- 
ficient to  give  it  legal  obligation,  as  against  Zacharias  Schnell.  It 
specifies  three  distinct  considerations  for  his  promise  to  pay  $600 : 

(1)  A  promise,  on  the  part  of  the  plaintiffs,  to  pay  him  one  cent. 


ADEQUACY   OF  CONSIDERATION  105 

(2)  The  love  and  affection  he  bore  his  deceased  wife,  and  the  fact 
that  she  had  done  her  part,  as  his  wife,  in  the  acquisition  of  the  prop- 
erty. 

(3)  The  fact  that  she  had  expressed  her  desire,  in  the  form  of  an 
inoperative  will,  that  the  persons  named  therein  should  have  the  sums 
of  money  specified. 

The  consideration  of  one  cent  will  not  support  the  promise  of 
Schnell.  It  is  true,  that  as  a  general  proposition,  inadequacy  of  con- 
sideration will  not  vitiate  an  agreement.  Baker  v.  Roberts,  14  Ind. 
552.  But  this  doctrine  does  not  apply  to  a  mere  exchange  of  sums  of 
money,  of  coin,  whose  value  is  exactly  fixed,  but  to  the  exchange  of 
something  of,  in  itself,  indeterminate  value,  for  money,  or,  perhaps, 
for  other  thing  of  indeterminate  value.  In  this  case,  had  the  one 
cent  mentioned  been  some  particular  one  cent,  a  family  piece,  or  an- 
cient, remarkable  coin,  possessing  an  indeterminate  value,  extrinsic 
from  -its  simple  money  value,  a  difterent  view  might  be  taken.  As  it 
is,  the  mere  promise  to  pay  six  hundred  dollars  for  one  cent,  even  had 
the  portion  of  that  cent  due  from  the  plaintiff  been  tendered,  is  an 
unconscionable  contract,  void,  at  first  blush,  upon  its  face,  if  it  be  re- 
garded as  an  earnest  one.  Hardesty  v.  Smith,  3  Ind.  39.  The  con- 
sideration of  one  cent  is,  plainly,  in  this  case,  merely  nominal,  and  in- 
tended to  be  so.  As  the  will  and  testament  of  Schnell's  wife  imposed 
no  legal  obligation  upon  him  to  discharge  her  bequests  out  of  his  prop- 
erty, and  as  she  had  none  of  her  own,  his  promise  to  discharge  them 
was  not  legally  binding  upon  him,  on  that  ground.  A  moral  consider- 
ation, only,  will  not  support  a  promise.  Ind.  Dig.  p.  13.  And  for  the 
same  reason,  a  valid  consideration  for  his  promise  cannot  be  found  in 
the  fact  of  a  compromise  of  a  disputed  claim ;  for  where  such  claim 
is  legally  groundless,  a  promise  upon  a  compromise  of  it,  or  of  a  suit 
upon  it,  is  not  legally  binding.     Spahr  v.  HoUingshead,  8  Blackf.  415. 

There  was  no  mistake  of  law  or  fact  in  this  case,  as  the  agreement 
admits  the  will  inoperative  and  void.  The  promise  was  simply  one  to 
make  a  gift.  The  past  services  of  his  wife,  and  the  love  and  affection 
he  had  borne  her,  are  objectionable  as  legal  considerations  for 
Schnell's  promise,  on  two  grounds  :  (1)  They  are  past  considerations. 
Ind.  Dig.  p.  13.  (2)  The  fact  that  Schnell  loved  his  wife,  and  that 
she  had  been  industrious,  constituted  no  consideration  for  his  promise 
to  pay  J.  B.  Nell  and  the  Lorenzes  a  sum  of  money.  Whether,  if  his 
wife,  in  her  lifetime,  had  made  a  bargain  with  Schnell,  that,  in  consid- 
eration of  his  promising  to  pay,  after  her  death,  to  the  person  named, 
a  sum  of  money,  she  would  be  industrious,  and  worthy  of  his  affec- 
tion, such  a  promise  would  have  been  valid  and  consistent  with  public 
policy,  we  need  not  decide.  Nor  is  the  fact  that  Schnell  now  vener- 
ates the  memory  of  his  deceased  wife,  a  legal  consideration  for  a 
promise  to  pay  any  third  person  money. 

The  instrument  sued  on,  interpreted  in  the  light  of  the  facts  alleged 
in   the  second  paragraph  of  the  answer,  will  not  support  an  action. 


1 06  CONSIDERATION 

The  demurrer  to  the  answer  should  have  been  overruled.    See  Steven- 
son V.  Druley,  4  Ind.  519. 

Per  Curiam.     The  judgment  is  reversed,  with  costs.     Cause  re- 
manded, etc 


IV.  Sufficiency  or  Reality  of  Consideration  " 
1.  Mutual  Promises — Voluntary  Subscriptions 


BEATTY'S  ESTATE  v.  WESTERN  COLLEGE  OF  TOLEDO, 

IOWA. 

(Supreme  Court  of  Illinois,  1898.     177  111.  280,  52  N.  E.  432,  42  L.  R.  A. 
797,  69  Am.   St.  Rep.  242.) 

In  the  matter  of  the  estate  of  Mary  Beatty,  deceased,  the  Western 
College  of  Toledo  obtained  a  judgment  against  Jacob  Miller  and  an- 
other, executors,  and  they  appealed  to  the  appellate  court,  which  af- 
firmed the  judgment  (71  111.  App.  587),  and  they  again  appeal. 
*     *     ♦ 

The  note,  filed  as  a  claim  against  the  estate  of  the  deceased,  is  as 
follows : 

"$7,000.00.  Dover,  III,  Dec.  9,  1887.  In  consideration  of  a  desire 
to  aid  the  cause  of  Christian  education,  and  the  privilege  of  sending 
one  student  four  years  free  of  tuition,  I  promise  to  pay  to  the  order 
of  the  treasurer  of  Western  College,  of  Toledo,  Iowa,  for  the  erection 
of  the  Ladies'  Boarding  Hall  of  said  college,  on  or  before  the  first 
day  of  December,  1910,  the  sum  of  seven  thousand  dollars,  without 
interest:  provided,  that  in  the  event  of  my  death  before  the  maturity 
of  this  note  it  shall  become  then  due.  Mary  Beatty.  P.  O. :  Dover. 
County:  Bureau.  State:  111.  Witness:  H.  H.  Maynard.  W.  M. 
Beardshear."     *     *     * 

The  appellee  is  a  college  located  at  Toledo,  in  the  state  of  Iowa, 
and  is  under  the  management  of  the  denomination  known  as  the 
United  Brethren  in  Christ.  Prior  to  December,  1887,  the  college  had 
commenced  the  erection  of  a  building  to  be  known  as  the  "Ladies' 
Boarding  Hall"  of  the  college,  and  had  expended  upon  the  stone  foun- 
dation thereof  the  sum  of  $2,000,  donated  to  it  by  a  man  in  Ohio, 
named  Dodds.  In  December,  1887,  representatives  of  the  college  ap- 
pealed to  the  deceased,  Mary  Beatty,  at  her  home  in  Dover,  111.,  for 
a  donation  of  $10,000,  to  complete  the  erection  of  said  hall,  she  being 
a  member  of  the  denomination  to  which  the  college  belonged.     On 

5  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  68-73, 
75-78,   80. 


SUTFICIENCY   OR  EEALITY   OF  CONSIDERATION  107 

December  9,  1887,  she  was  visited  by  H.  H.  Maynard,  a  soliciting 
agent  of  the  college,  and  W.  M.  Beardshear,  president  of  the  college. 
On  December  3,  1887,  she  had  given  to  Maynard  $500  in  cash,  a  note 
for  $1,500,  payable  on  or  before  December  3,  1890,  and  a  note  for 
$5,000  of  like  tenor  with  the  note  for  $7,000  above  set  forth.  On 
December  9,  1887,  she  destroyed  the  $5,000  note,  and  gave  to  May- 
nard and  Beardshear  the  $7,000  note  above  described,  and  also  a  short- 
time  note  for  $1,000.     ♦     *     * 

Magruder,  J.6  *  ♦  ♦  It  is  contended,  however,  that  the  note 
for  $7,000,  filed  as  a  claim  in  this  case,  was  executed  and  delivered 
without  any  valid  consideration  to  support  it.  The  note  recites  upon 
its  face  that  the  maker  thereof  promises  to  pay  "in  consideration  of 
a  desire  to  aid  the  cause  of  Christian  education,  and  the  privilege  of 
sending  one  student  four  years  free  of  tuition."  It  is  unnecessary  to 
discuss  the  question  whether  this  note,  upon  its  face,  imports  a  con- 
sideration or  not.  The  general  rule  is  that,  when  a  note  contains  the 
words  "for  value  received,"  the  consideration  is  imported.  Meyers  v. 
Phillips,  72  111.  460.  Whether  this  note,  upon  its  face,  imports  a  con- 
sideration or  not,  it  is  well  settled  that  proof  may  be  introduced  to 
show  the  facts  in  regard  to  the  consideration  of  the  note.  The  evi- 
dence tends  to  show  that  the  deceased  availed  herself  of  the  privilege, 
specified  in  the  note,  of  sending  one  student  four  years  free  of  tuition. 
The  certificate  embodying  such  privilege  was  issued  to  Mrs.  Beatty, 
and  was  made  use  of  by  a  female  student  upon  the  order  of  Mrs. 
Beatty. 

We  do  not  deem  it  necessary,  however,  to  decide  whether  or  not  the 
privilege  specified  upon  the  face  of  the  note,  and  the  use  of  it  made 
by  the  deceased,  constituted  a  valid  consideration.  The  proof  tends 
to  show  that  the  note  for  $7,000  was  a  gift  or  donation  to  the  college. 
Such  a  note  partakes  of  the  nature  of  a  voluntary  subscription  to 
raise  a  fund  or  promote  an  object.  It  is  well  settled  that  a  promissory 
note  without  consideration,  and  intended  as  a  gift  to  the  payee  by  the 
maker  thereof,  is  but  a  promise  to  make  a  gift  in  the  future,  and  is 
not  enforceable.  As  a  gift  it  is  always  revocable  until  it  is  executed, 
and  is  not  executed  until  it  is  paid.  "The  promise  stands  as  a  mere 
offer,  and  may,  by  necessary  consequence,  be  revoked  at  any  time  be- 
fore 'it  is  acted  upon."  Pratt  v.  Trustees,  93  111.  475,  34  Am.  Rep. 
187.  In  Blanchard  v.  Williamson,  70  111.  647,  652,  we  said:  "If  a 
party  delivers  his  own  promissory  note  as  a  gift,  it  is  but  a  promise  to 
pay  a  sum  certain  at  a  future  day,  and  we  are  not  aware  such  a  prom- 
ise can  be  enforced,  either  at  law  or  in  equity.  It  could  not  be  en- 
forced against  the  maker  in  his  lifetime,  and  his  representatives  could 
defend  against  it  on  the  ground  there  was  no  consideration."     Shaw. 

«The  statemont  of  facts  Is  aliridKcd  aiul  a  portion  of  the  opinion  omittoil. 
The  title  of  this  case  In  02  N.  E.  4:ili,  42  L.  11.  A.  797,  is  Miller  v.  West- 
ern   Colletje. 


108  CONSIDERATION 

V.  Camp,  supra  [160  111.  425,  43  N.  E.  608]  ;  Williams  v.  Forbes,  114 
III.  167,  28  N.  E.  463 ;  Richardson  v.  Richardson,  148  111.  563,  36  N. 
E.  608,  26  L.  R.  A.  305 ;  Pope  v.  Dodson,  58  111.  360. 

But,  while  such  a  note,  amounting  to  a  mere  gift,  is  open  to  the  de- 
fense of  a  want  of  consideration,  yet  that  defense  cannot  be  made  to 
it  if  money  has  been  expended,  or  liabilities  have  been  incurred,  in 
reliance  upon  the  note.  If  money  has  been  expended,  or  liabilities 
have  been  incurred,  which,  by  legal  necessity,  must  cause  loss  or  in- 
jury to  the  person  so  expending  money  or  incurring  liability,  if  the 
note  is  not  paid,  the  donor*  or  maker  thereof  is,  in  good  conscience, 
bound  to  pay ;  and  the  gift  will  be  upheld  upon  the  ground  of  estoppel, 
and  not  by  reason  of  any  valid  consideration  in  the  original  undertak- 
ing. We  have  said :  "It  is  the  expending  of  money,  etc.,  or  incurring 
a  legal  liability  on  the  faith  of  the  promise,  which  gives  the  right  of 
action ;  and  without  this  there  is  no  right  of  action."  Pratt  v.  Trus- 
tees, 93  111.  475,  34  Am.  Rep.  187;  Beach  v.  Church,  96  111.  177; 
Hudson  V.  Seminary  Corp.,  113  111.  618. 

In  Simpson  Centenary  College  v.  Tuttle,  71  Iowa,  596,  33  N.  W. 
74,  the  supreme  court  of  Iowa  said :  "Where  a  note,  however,  is  based 
on  a  promise  to  give  for  the  support  of  the  objects  referred  to  [found- 
ing a  school,  church,  or  other  institution  of  similar  character],  it  may 
still  be  open  to  this  defense  [want  of  consideration],  unless  it  shall  ap- 
pear that  the  donee  has,  prior  to  any  revocation,  entered  into  engage- 
ments or  made  expenditures  based  on  such  promise,  so  that  he  must 
suffer  loss  or  injury  if  the  note  is  not  paid.  This  is  based  on  the  equi- 
table principle  that,  after  allowing  the  donee  to  incur  obligations  on 
the  faith  that  the  note  would  be  paid,  the  donor  should  be  estopped 
from  pleading  want  of  consideration."  Wesleyan  Seminary  v.  Fisher, 
4  Mich.  515;  Amherst  Academy  v.  Cowls,  6  Pick.  427,  17  Am.  Dec. 
387;  Roberts  v.  Cobb,  103  N.  Y.  600,  9  N.  E.  500;  Johnson  v.  Wa- 
bash College,  2  Ind.  555  ;  Roche  v.  Roanoke  Classical  Seminary,  56  Ind. 
198 ;  Simpson  Centenary  College  v.  Bryan,  50  Iowa,  293 ;  Vierling 
V.  Horton,  27  111.  App.  263 ;  Pryor  v.  Cain,  25  111.  292 ;  Methodist 
Episcopal  Church  v.  Kendall,  121  Mass.  528,  23  Am.  Rep.  286. 

There  was  evidence  in  the  case  at  bar  tending  to  show  that  the 
appellee  expended  money  in  the  construction  of  the  building  known 
as  "Ladies'  Boarding  Hall"  upon  the  faith  of  the  promise  made  by  the 
deceased  as  embodied  in  the  note  for  $7,000.  It  is  true  that  the 
money  represented  by  the  three  certificates  was  all,  or  nearly  all, 
used  in  the  construction  of  the  building.  But  the  contract  for  the 
construction  of  it  was  let  in  the  latter  part  of  July,  1888,  and  the 
erection  of  the  building  was  begun  about  August  1,  1888.  This  was 
some  months  prior  to  the  gift  of  the  $3,500  represented  by  the  first 
certificate,  dated  November  16,  1888.  The  correspondence  introduced 
in  evidence,  and  the  statements  of  many  of  the  witnesses,  show  that 
the  contract  was  let,  and  the  work  upon  the  building  was  begun  and 
prosecuted,  with  the  expectation  that  the  deceased   would  advance 


SUFFICIENCY   OR   REALITY   OF   CONSIDERATION  109 

money  upon  the  note  for  $7,000.  It  makes  no  difference  that  she^did 
not  advance  any  money  upon  that  note,  but  preferred  to  donate  $6,700, 
and  take  back  certificates,  which  secured  to  her  the  payment  of  annui- 
ties thereon  during  her  life. 

The  instructions  given  by  the  court  to  the  jury  required  them  to 
find  whether  or  not  the  college,  during  the  lifetime  of  Mary  Beatty, 
entered  into  a  contract  to  build  and  erect,  and  did  build  and  erect,  and 
expend  moneys  and  incur  liabilities  in  building  and  erecting,  the  La- 
dies' Boarding  Hall  on  the  faith  and  strength  of  the  note  for  $7,000. 
The  question  as  to  the  expenditure  of  such  moneys  and  the  incurrmg 
of  such  liabilities  upon  the  faith  and  strength  of  the  note  was  a  ques- 
tion of  fact,  which  was  submitted  to  the  jury  by  the  instructions.  The 
judgment  of  the  circuit  court  in  favor  of  appellee,  and  the  judgment 
of  the  appellate  court  affirming  the  judgment  of  the  circuit  court,  arc 
final  determinations  of  this  question  of  fact,  so  far  as  we  are  con- 
cerned. In  the  present  state  of  the  record,  we  are  obliged  to  assume 
that  the  jury  found  in  favor  of  such  expenditures  of  money  and  the 
incurring  of  such  liabilities  on  the  part  of  the  appellee.  This  being  so, 
the  appellee  is  entitled  to  its  right  of  action,  even  if  the  note  for  $7,- 
000  was  without  consideration  before  it  was  thus  acted  upon.^ 

Upon  this  branch  of  the  case,  therefore,  we  are  of  the  opinion  that 
the  courts  below  committed  no  error  in  holding  the  claim  of  appellee 
to  be  a  valid  claim.     *     ♦     *    Judgment  affirmed. 


2.   FORBEIARANCE  TO  ExERCISE  A  RiGHT 


SMITH  V.  FARRA. 
(Supreme  Court  of  Oregon,  1891.    21  Or.  395,  28  Pac.  241,  20  L.  R.  A.  115.) 

Action  by  Cyrus  Smith  against  G.  R.  Farra  and  D.  B.  Montieth  on 
an  agreement  of  compromise.    Judgment  for  plaintiff.    Farra  appeals. 

The  other  facts  fully  appear  in  the  following  statement  by  Bean,  J. : 

This  is  an  action  to  recover  $700  on  an  agreement  of  compromise 
between  plaintiff  and  the  defendant,  Farra.    The  facts  are  these : 

On  July  24,  1888,  defendant,  Farra,  and  one  Montieth,  for  $305  cash, 
sold  and  conveyed  by  deed  containing  covenants  of  title  and  warranty, 
lots  7  and  8  in  block  4,  in  West  Yaquina,  Benton  county.  Or.,  to  plain- 
tiff. In  August,  1890,  Farra,  discovering  that  he  and  Montieth  did 
not  own  the  property  .sold  to  plaintiff,  wrote  him  the  following  letter: 
"Corvallis,  Oregon,  Aug.  7th,  1890.  Mr.  Cyrus  Smith,  Amity,  Or.— 
Dear  Sir:  The  men  who  have  been  engaged  in  getting  up  an  abstract 
of  Benton  county  have  made  a  discovery  that  we  sold  you  two  lots^ 
Nos.  7  and  H,  in  block  4,  in  West  Yaquina— that  had  been  sold  and 


no  CONSIDERATION 

deeded  before  to  Mr.  W.  P.  Keady.  We  wo-ald  like  you  to  select  two 
other  lots  in  or  near  those,  or  even  in  some  other  portion,  of  about  the 
same  value,  and  we  will  deed  them  to  you.  Yours,  respectfully,  G. 
R.  Farra." 

To  this  letter  plaintiff  replied  as  follows:  "Amity,  Oregon,  Aug. 
11th,  1890.  Dr.  G.  R.  Farra— Dear  Sir:  Your  letter  of  the  7th  inst.  is 
at  hand,  and  in  reply  will  say  I  was  very  much  surprised  to  hear  that 
Mr.  Keady  had  a  deed  made  prior  to  mine  to  the  lots  in  West  Yaquina 
that  you  had  deeded  to  me.  I  was  also  a  little  diverted  at  the  idea  that 
you  should  say,  'The  lots  Mr.  Buford  sold  you,'  when  the  record  shows 
that  you  and  Mr.  Montieth  sold  me  the  lots,  and  Mr.  Buford  not  known 
in  the  transaction.  I  have  had  those  lots  in  a  real-estate  man's  hands 
for  some  time.  He  has  been  instructed  by  me  to  sell  the  two  for  one 
thousand  dollars,  and  nothing  less.  I  have  been  offered  eight  hundred 
dollars  for  them,  and  refused  it,  I  have  taken  counsel  in  the  matter, 
and  have  been  told  that  beyond  a  doubt  I  could  recover  from  you  and 
Mr.  Montieth  all  the  damage  it  is  to  me,  but,  as  I  am  averse  to  law- 
suits, I  had  much  rather  se.ttle  the  matter  ourselves,  providing  I  can  do 
so  without  too  much  loss.  Please  write  me  how  it  happened  that  you 
deeded  those  lots  to  me  after  you  had  deeded  them  to  Mr.  Keady.  In 
regard  to  taking  other  lots  in  place  of  them,  I  would  do  so,  providing 
I  couldl  get  what  I  consider  a  fair  deal.  I  know  every  foot  of  that 
ground,  and,  excepting  about  six  lots,  I  would  rather  have  those  lots 
than  any  other  two  lots  in  West  Yaquina.  Please  send  me  a  plat  of 
West  Yaquina,  marking  all  the  lots  sold.  Also  make  me  an  offer  of 
what  you  propose  to  do,  and  oblige,  yours  truly,  Cyrus  Smith." 

Several  others  letters  of  both  parties  appear  in  the  record,  which 
are  unnecessary  to  be  set  out  here,  but  which  show  an  honest,  bona 
fide  attempt  on  the  part  of  each  to  arrive  at  some  satisfactory  settle- 
ment of  the  controversy,  but,  without  being  able  to  do  so,  until  Sep- 
tember 8,  1890,  when  plaintiff  wrote  to  defendant  the  following  letter: 
"Amity,  Sept.  8th,  1890.  Dr.  G.  R.  Farra— Dear  Sir:  Yours  in  an- 
swer to  my  inquiry  as  to  your  least  cash  price  on  certain  lots  in  West 
Yaquina  came  to  hand  over  a  week  ago,  but  not  before  I  had  informed 
you  that  I  did  not  want  them  at  any  price.  For  some  reason  I  have 
received  no  answer  to  my  last  letter  to  you,  written  Aug.  30th.  I  now 
write  to  inform  you  that  something  must  be  done.  We  have  talked 
this  matter  over  enough  to  come  to  some  conclusion.  I  want  it  under- 
stood that  I  refuse  to  take  the  lots  you  have  offered  me  for  those  I 
bought  of  you,  and  I  presume  you  will  not  contend  that  I  am  under 
any  obligation  to  do  so.  I  merely  want  you  andl  Mr,  Montieth  to 
perfect  my  title  to  the  lots  I  bought  of  you,  or  I  want  you  to  pay  me 
eight  hundred  dollars.  I  think  I  am  very  reasonable  in  this  offer.  In 
fact  you  have  indirectly  offered  me  that,  for  you  have  offered  me  two 
lots  that  you  valued  at  $350  each,  and  $100,  which  is  exactly  $800.  I 
am  aware  that  you  would  rather  dispose  of  the  lots  than  come  out 
with  the  money,  which  I  presume  is  the  reason  you  don't  give  me  my 


SXJFFICIENCY   OE   REALITY   OF   CONSIDERATION  111 

choice  to  take  the  money  or  the  lots.  But  the  lots  I  bought  of  you  I 
bought  for  a  particular  purpose,  and  the  lots  you  have  offered!  me 
won't  fill  that  purpose  in  any  sense,  owing  to  the  lay  of  the  land.  In 
fact  I  would  rather  have  the  lots  I  bought  of  you  than  lots  1  and  2 
immediately  in  front  of  them.  Please  let  me  know  immediately  your 
final  conclusion.     Yours,  truly,  Cyrus  Smith." 

To  this  letter  Farra  replied  as  follows:  "Corvallis,  Oregon,  Sept. 
22,  1890.  Mr.  Cyrus  Smith,  Amity,  Or.— Dear  Sir:  Your  last  has 
been  to  hand  for  quite  a  while,  but  I  have  been  conferring  with  others 
of  the  company  to  know  what  best  to  do.  We  have  decided  that  we 
made  you  a  fair  proposition  on  your  lots,  and  more  than  the  lots  can  be 
sold  for  to-day,  and  more  than  you  can  collect  for  therfi  if  carried  into 
litigation.  We  will' make  you  one  more  proposition:  We  will  give 
you,  as  stated  in  one  of  my  letters,  two  lots  in  block  3,  facing  as  yours 
face,  and  one  hundred  dollars,  ($100,)  or  we  will  give  you  seven  hun- 
dred dollars  in  cash.  If  this  is  not  satisfactory,  you  can  proceed  to 
collect  your  damages  by  law.    Yours,  respectfully,  G.  R.  Farra." 

Upon  receipt  of  this  letter  plaintiff  wrote,  accepting  the  cash  offer 
of  $700,  as  follows:  Amity,  Sept.  24,  1890.  Dr.  G.R.  Farra,  Cor- 
vallis, Or. — Dear  Sir :  Yours  of  the  22d  was  received  yesterday,  and 
in  reply  will  say  in  justice  I  believe  I  am  entitled  to  eight  hundred  dol- 
lars, but  I  can't  afford  to  go  into  litigation  for  one  hundred  dollars. 
Therefore  I  accept  your  offer  of  seven  hundred  dollars,  and  on  re- 
ceipt of  the  money  I  will  relinquish  all  my  claims  on  you  and  Mr. 
Montieth  for  lots  seven  and  eight  in  block  4  of  West  Yaquina.  Send 
check  on  the  bank,  and  I  will  receipt  you  for  it.  Yours,  truly,  Cyrus 
Smith." 

Defendant  having  refused  to  comply  with  his  agreement  and  pay  the 
$700,  this  action  was  brought.  The  trial  in  the  court  below  resulted 
m  a  verdict  and  judgment  in  favor  of  the  plaintiff,  from  which  defend- 
ant appeals. 

Bean,  J.  (after  stating  the  facts.)  The  only  question  presented  on 
this  record  is  the  validity  of  the  agreement  of  compromise  between 
plaintiff  and  defendant  under  the  facts  heretofore  stated.  The  con- 
tention of  defendant  is  that  for  a  breach  of  the  covenant  of  title  con- 
tained in  his  deed  to  plaintiff  the  law  fixes  the  measure  of  damages 
at  the  purchase  price  and  interest,  and  that,  therefore,  the  claim  of 
plaintiff  was  a  fixed  and  liquidated  one,  and  in  no  sense  such  a  doubt- 
ful claim  as  will  support  an  agreement  of  compromise.  Upon  this 
record  it  must  be  conceded  that  plaintiff  had  a  valid  cause  of  action 
against  defendant  for  a  breach  of  the  covenants  of  the  deed  upon  whicli 
he  could  have  successfully  maintained  legal  proceedings,  and  that  both 
j)arties  in  their  negotiations  for  a  settlement,  in  good  faith,  believed 
that  the  measure  of  damages  was  the  actual  value  of  the  property 
conveyed  at  the  time  the  negotiations  took  j^lace,  and  not  the.  con- 
sideration and  interest ;  and,  in  order  to  avoid  litigation,  and  com- 
promise the  matter  in  dispute  between  them,  the  agreement  sued  on 


112  CONSIDERATION 

was  made.  Both  parties  were  acting  in  the  utmost  good  faith,  with 
equal  knowledge  of  the  facts,  and  plaintiff  had  reasonable  ground  to 
think,  for  he  had  taken  legal  advice  on  the  question,  that  his  damages 
amounted  to  $800,  and  intended  in  good  faith  to  assert  his  claim,  but 
to  avoid  litigation  he  forebore  to  do  so,  on  account  of  defendant's 
promise  to  pay  him  $700,  preferring  to  accept  that  amount  rather  than 
go  into  litigation,  and  defendant  preferring  to  pay  that  sum  rather  than 
to  suffer  the  consequences  of  a  lawsuit.  That  there  was  an  actual,  bona 
fide  dispute  between  these  parties  as  to 'the  amount  of  plaintiff's  dam- 
ages, which  each  in  good  faith  believed  to  be  doubtful,  and  that  the 
settlement  was  intended,  in  good  faith,  as  a  compromise  of  such  dis- 
pute, is  not  open  to  question  on  this  record. 

But  it  is  now  insisted  that  the  dispute  was  about  a  matter  not  in 
fact  doubtful,  although  the  parties  so  considered  it,  and  therefore  the 
agreement  of  compromise  is  without  consideration.  The  law  favors 
\'oluntary  settlements  of  controversies  between  the  parties,  which  are 
characterized  by  good  faith  and  a  full  disclosure  of  all  the  facts.  Wells 
v.  Neff,  14  Or.  66,  12  Pac.  84,  88.  And  such  settlements  will  be  up- 
held and  enforce'd,  although  the  disposition  made  by  the  parties  in  their 
agreement  may  not  be  what  the  court  would  have  adjudged  had  the 
controversy  been  brought  before  it  for  decision.  Nor  need  the  dispute 
to  have  been  about  a  claim  or  matter  actually  doubtful.  If  the  parties 
bona  fide,  and  on  reasonable  grounds,  believed  it  to  be  doubtful,  it  is  a 
sufficient  consideration  to  support  the  compromise.  "If  the  requisites 
of  good  faith  exist,"  says  Mr.  Pomeroy,  "it  is  not  necessary  that  the 
dispute  should  be  concerning  a  question  really  doubtful,  if  the  parties 
bona  fide  consider  it  so.  It  is  enough  that  there  is  a  question  between 
them  to  be  settled  by  their  compromise."  Pom.  Eq.  Jur.  §  850.  And 
"no  investigation  into  the  character  or  value  of  the  different  claims 
submitted,"  says  Mr.  Parsons,  "will  be  entered  into  for  the  purpose  of 
setting  aside  a  compromise,  it  being  sufficient  if  the  parties  entering 
into  the  compromise  thought  at  the  time  that  there  was  a  dispute  be- 
tween them."     1  Pars.  Cont.  (7th  Ed.)  439. 

It  is  not  every  disputed  claim,  however,  which  will  support  a  com- 
promise, but  it  must  be  a  claim  honestly  and  in  good  faith  asserted, 
concerning  which  the  parties  may  bona  fidle  and  upon  reasonable 
grounds  disagree.  The  compromise  of  such  a  claim  in  good  faith  is 
a  good  consideration  to  pay  money  in  settlement  thereof,  and  when 
an  action  is  brought  upon  such  promise  it  is  no  defense  to  say  that  the 
claim  was  not  in  fact  a  valid  one,  or  that  the  parties  were  mistaken 
either  as  to  the  law  or  the  facts.  Stewart  v.  Ahrenfeldt,  4  Denio  (N. 
Y.)  189 ;  Crans  v.  Hunter,  28  N.  Y.  389 ;  White  v.  Hoyt,  7Z  N.  Y. 
505;  Griswold  v.  Weight,  61  Wis.  195,  21  N.  W.  44;  Brooks  v.  Hall, 
36  Kan.  697,  14  Pac.  236 ;  Flannagan  v.  Kilcome,  58  N.  H.  443 ; 
Wehrum  v.  Kuhn,  61  N.  Y.  623.  Nor  is  it  a  defense  that  the  claim 
could  not  have  been  maintained  if  suit  or  action  had  been  brought 
upon  it,  or  that  the  parties  were  mistaken  as  to  the  law;    for  if  it  is, 


SUFFICIENCY    OE   REALITY    OF   CONSIDERATION  113 

then  it  would  follow  that  contracts  by  the  parties  settling  their  own 
disputes  would  at  least  be  made  to  stand  or  fall  according  to  the  opin- 
ion of  the  court  as  to  how  the  law  would  have  determined  it.  "If, 
therefore,"  says  Logan,  J.,  "the  solemn  compromise  of  the  parties  is 
made  to  depend  on  the  question  whether  the  parties  have  so  settled  the 
dispute  as  the  law  would  have  done,  then  it  may  be  truly  said  that 
a  compromise  is  an  unavailing,  idle  act,  which  questions  even  the  pow- 
er of  the  parties  to  bind  themselves."  Fisher  v.  May,  2  Bibb  (Ky.) 
448,  5  Am.  Dec.  626. 

The  settlement  of  a  controversy  is  valid  and  binding,  not  because  it 
is  the  settlement  of  a  valid  claim,  but  because  it  is  the  settlement  of 
a  controversy.  And  when  such  settlement  is  characterized  by  good 
faith  the  court  will  not  look  into  the  question  of  law  or  fact  in  dispute 
between  the  parties,  and  determine  which  is  right.  All  that  it  needs  to 
know  is  that  there  was  a  controversy  between  the  parties,  each  claiming 
in  good  faith  rights  in  himself  against  the  other,  and  that  such  contro- 
versy has  been  settled.  In  Cook  v.  Wright,  1  Best  &  S.  559,  it  appeared 
from  the  evidence  that  defendant  believed  himself  not  liable  on  the  de- 
mand of  plaintiff ;  but  he  knew  that  plaintiff  thought  him  liable,  and 
would  sue  him  if  he  did  not  pay,  and,  in  order  to  avoid  the  expense 
and  trouble  of  legal  proceedings  against  him,  agreed  to  compromise, 
and  gave  his  note  for  the  amount  agreed  on  in  compromise,  and  the 
question  was  whether  a  person  who  has  given  a  note  as  a  compromise 
of  a  claim  honestly  made  upon  him,  and  which,  but  for  that  compro- 
mise, would  at  once  have  been  brought  to  a  legal  decision,  can  resist 
payment  of  the  note  on  the  ground  that  the  original  claim  thus  com- 
promised might  have  been  successfully  resisted;  and  it  was  held  he 
could  not,  Blackburn,  J.,  saying:  "The  real  consideration  depends  on 
the  reality  of  the  claim  made  and  the  bona  fides  of  the  compromise." 

In  Callisher  v.  Bischoffsheim,  L.  R.  5  O.  B.  449,  the  plaintiff  claimed 
that  certain  moneys  were  due  him  from  the  government  of  Honduras, 
and  was  about  to  take  proceedings  to  enforce  payment,  and,  in  con- 
sideration that  the  plaintiff  would  forbear  taking  such  proceedings  for 
an  agreed  time,  the  defendant  promised  to  deliver  to  him  certain  de- 
bentures. In  an  action  for  a  breach  of  the  contract  the  plea  was  that 
at  the  time  of  making  the  contract  no  money  was  due  the  plaintiff 
from  the  government  of  Honduras.  This  plea  was  held  bad  on  demur- 
rer, Cockburn  C.  J.  saying:  "No  doubt  it  must  be  taken  that  there 
was  in  fact  no  claim  by  the  plaintiff  against  the  Honduras  government 
which  could  be  prosecuted  by  legal  proceedings  to  a  successful  issuer 
but  this  does  not  vitiate  the  contract  and  destroy  the  validity  of  wha< 
is  alleged!  as  the  consideration.  The  authorities  clearly  establish  that, 
if  an  agreement  is  made  to  compromise  a  dis[)utc(l  claim  forbearance 
to  sue  in  respect  of  that  claim  is  a  good  consideration,  and,  whether 
proceedings  to  enforce  the  disputed  claim  have  or  have  not  been  in- 
stituted, makes  no  difference." 

TIIBOCKM.CONT. — 8 


114  CONSIDERATION 

In  Grandin  v.  Grandin,  49  N.  J.  Law,  508,  9  Atl.  756,  60  Am.  Rep. 
642,  the  plaintiff  was  an  heir  at  law  of  the  deceased,  and  in  good  faith 
filed  objections  to  the  probate  of  the  will,  and,  in  consideration  of  his 
withdrawing  his  objections  and  making  no  further  opposition  to  the 
probate  of  the  will,  the  defendant  agreed  to  pay  him  $300.  In  an  ac- 
tion on  this  promise  it  was  held  that  the  compromise  was  valid  and 
binding,  although  it  ultimately  appeared  that  the  claim  of  the  plaintiff 
was  wholly  unfounded. 

In  Bellows  v.  Sowles,  55  Vt.  391,  45  Am.  Rep.  621,  the  facts  are  as 
in  the  case  last  above  cited,  except  that  the  plaintiff  had  not  instituted 
proceedings  to  contest  the  will,  but  was  making  arrangements  to  do 
so,  and  defendant  promised  to  pay  him  $5,000  if  he  would  desist  from 
such  opposition  to  the  will.  In  an  action  on  the  promise  the  court 
held  that  plaintiff  was  not  bound  to  show  that  his  ground  of  opposi- 
tion to  the  will  would  have  been  sufficient  to  have  defeated  its  pro- 
bate. It  was  enough  if  he  was  able  to  show  that  he  honestly  thought 
he  had  good  and  reasonable  ground  for  making  the  claim  that  the  will, 
so  far  as  it  related  to  him,  was  the  production  of  undue  influence,  and' 
for  that  reason  he  honestly  and  in  good  faith  intended  to  oppose  its  es- 
tablishment. In  some  of  the  authorities  it  is  said  that,  in  order  that  a 
compromise  may  constitute  a  sufficient  consideration  to  support  an 
executory  contract,  the  claim  must  be  at  least  doubtful,  and  there  must 
be  colorable  ground  of  dispute,  and  some  legal  or  equitable  foundation 
for  the  claim.  Anthony  v.  Boyd,  15  R.  I.  495,  8  Atl.  701,  10  Atl. 
657;   Mortgage  Co.  v.  Henderson,  111  Ind.  24,  12  N.  E.  88. 

This  statement  must  be  construed  with  reference  to  the  facts  of  the 
particular  case,  and,  when  so  read,  will,  we  think,  be  found  to  mean 
nothing  more  than  that  the  claim  must  be  a  serious  one,  honestly  made, 
which  the  party  asserting  does  not  know  is  unsubstantial,  but  believes 
he  has  a  fair  chance  of  sustaining,  or  does  not  know  facts  to  his  knowl- 
edge unknown  to  the  other  party,  which  show  his  claim  a  bad  one. 

As  a  result  from  the  authorities,  we  think  a  doubtful  or  disputed 
claim,  sufficient  to  constitute  a  good  consideration  for  an  executory 
contract  of  compromise,  is  one  honestly  and  in  good  faith  asserted, 
arising  from  a  state  of  facts  upon  which  a  cause  of  action  can  be 
predicated,  with  the  reasonable  belief  on  the  part  of  the  party  assert- 
ing it  that  he  has  a  fair  chance  of  sustaining  his  claim,  and  concern- 
ing which  an  honest  controversy  may  arise,  although  in  fact  the  claim 
may  be  wholly  unfounded. 

In  the  case  before  us  plaintiff  not  only  had  a  cause  of  action,  but 
an  admitted  right  of  action,  growing  out  of  the  sale  of  the  property 
and  the  execution  and  delivery  of  the  deed,  which  he  couldl  have  pros- 
ecuted to  a  successful  issue,  and  upon  the  facts  of  which  he  honestly 
and  in  good  faith  believed  his  damages  amounted  to  at  least  $800.  This 
question  he  intended  to  submit  to  judicial  decision.  It  was  a  question 
concerning  which  there  could  be  and  actually  was  an  honest  contro- 
versy.    The  proposition  of  settlement  came  from  defendant,  and  the 


SUTFICIENCY    OE   REALITY    OF   CONSIDERATION  115 

compromise  was  effected  after  weeks  of  negotiation,  at  his  solicitation. 
He  had  as  full  and  complete  knowledge  of  all  the  facts  as  the  plain- 
tiff, and  presumedly  more  so.  By  the  compromise,  and  on  the  faith 
of  defendant's  promise,  plaintiff  forebore  to  assert  his  claim  in  the 
courts,  and  gave  up  a  portion  of  what  he  believed  to  be  a  valid  claim, 
and  defendant,  instead  of  being  annoyed  with  an  action,  escaped  the 
vexations  incident  thereto,  although  other  motives  may  have  prompted 
him  to  make  the  proposition  of  settlement ;  and  this  is  a  sufficient 
consideration  to  support  defendant's  promise.  This  is  so,  although  it 
may  now  be  clear  that  plaintiff  could  only  have  recovered  in  an  ac- 
tion the  consideration  by  him  paid  for  the  property,  and  that  his  claim 
for  $800  was  in  law  wholly  unfounded. 

The  defendant  cannot  escape  liability  on  his  solemn  contract,  entered 
into  at  his  request  and  solicitation,  by  now  showing  or  claiming  that 
he  was  mistaken  as  to  the  law.  It  is  sufficient  for  us  to  know  that  there 
was  a  dispute  between  the  parties,  and)  that  it  has  been  in  the  utmost 
good  faith  settled.  Whether  it  was  entirely  the  desire  to  avoid  litiga- 
tion, or  what  appeared  to  him  some  sufficient  consideration,  that  in- 
duced the  defendant  to  make  the  offer  of  settlement  accepted  by  plain- 
tiff, is  unnecessary  for  us  to  inquire.  It  is  enough  that  with  full  knowl- 
edge of  all  the  facts,  and  without  any  fraud  or  concealment  on  the  part 
.of  plaintiff,  the  oft'er  was  made  and  accepted.  Nor  is  it  necessary  for 
plaintiff  to  show  that  the  law  would  have  awarded  him  the  ^damages 
claimed.  It  is  enough  if  he  had  an  honest,  reasonable  ground  to  think 
his  damages  amounted  to  $800,  and  intended  in  good  faith  to  assert 
it,  and  forebore  to  do  so  on  account  of  defendant's  promise.  Con- 
ceding, therefore,  that  the  measure  of  damages  growing  out  of  the 
sale  of  the  property  and  execution  and  delivery  of  the  deed  from  de- 
fendant to  plaintiff  is  the  purchase  price  and  interest, — a  question, 
however,  we  are  not  called  upon  to  determine, — the  compromise  be- 
tween plaintiff  and  defendant  was  supported  by  a  sufficient  considera- 
tion, and  is  valid  and  binding.    Judgment  of  court  below  affirmed. 

Strahan,  C.  J.,  being  pecuniarily  interested  in  the  result  of  this 
action,  did  not  sit  in  this  case,  and  took  no  part  in  this  decision. 


3.  Doing  What  One  is  Bound  to  Do 
(A)  Additional  Compensation 


KING  V.  DULUTH,  M.  &  N.  RY.  CO. 

(Supreme  Court  of  Minnesota,  180.j.     <;i  Minn.  481',  ("..'l  N.   W.  110".) 

Action  by  George  R.  King,  as  surviving  partner  of  the  late  firm  of 
»Vif  &  King,  against  the  Duluth,  Mii^s-abe  &  Northern  Railway  Com- 


116  CONSIDERATION 

pany,  on  contract.  From  an  order  overruling  a  demurrer  to  the  com- 
l)laint,  defendant  appeals. 

Start,  C.  J.  This  is  an  action  brought  by  the  plaintiff,  as  surviv- 
ing partner  of  the  firm  of  Wolf  &  King,  to  recover  a  balance  claimed 
to  be  due  for  the  construction  of  a  portion  of  the  defendant's  line  of 
railway.  The  complaint  alleges  two  supposed  causes  of  action,  to 
each  of  which  the  defendant  demurred  on  the  ground  that  neither  states 
facts  constituting  a  cause  of  action.  From  an  order  overruling  the 
demurrer  the  defendant  appealed. 

1.  The  complaint  for  a  first  cause  of  action  alleges,  among  other 
things,  substantially,  that  in  January,  1893,  the  firm  of  Wolf  &  King 
entered  into  three  written  contracts  with  the  president  and  representa- 
tive of  the  defendant  for  the  grading,  clearing,  grubbing,  and  con- 
struction of  the  roadbed  of  its  railway  for  a  certain  stipulated  price  for 
each  of  the  general  items  of  work  and  labor  to  be  performed ;  that 
the  firm  entered  upon  the  performance  of  such  contracts,  but  in  the 
latter  part  of  February,  1893,  in  the  course  of  such  performance,  un- 
foreseen difiiculties  of  construction  involving  unexpected  expenses, 
and  such  as  were  not  anticipated  by  the  parties  to  the  contracts,  were 
encountered.  That  the  firm  of  Wolf  &  King  found  that  by  reason 
of  such  difficulties  it  would  be  impossible  to  complete  the  contracts 
within  the  time  agreed  upon  without  employing  an  additional  and  an 
unusual  force  of  men  and  means,  and  at  a  loss  of  not  less  than  $40,000 
to  them,  and  consequently  they  notified  the  representative  of  the  de- 
fendant that  they  would  be  unable  to  go  forward  with  the  contracts, 
and  unable  to  complete  or  prosecute  the  work.  Thereupon  such  rep- 
resentative entered  into  an  agreement  with  them  modifying  the  writ- 
ten contracts,  whereby  he  agreed  that  if  they  would  "go  forward  and 
prosecute  the  said  work  of  construction,  and  complete  said  contract," 
he  would  pay  or  cause  to  be  paid  to  them  an  additional  consideration 
therefor,  up  to  the  full  extent  of  the  cost  of  the  work,  so  that  they 
should  not  be  compelled  to  do  the  work  at  a  loss  to  themselves ;  that 
in  consideration  of  such  promise  they  agreed  to  forward  the  work  rap- 
idly, and  force  the  same  to  completion,  in  the  manner  provided  in  the 
specifications  for  such  work,  and  referred  to  in  such  contracts.  That 
in  reliance  upon  the  agreement  modifying  the  former  contracts,  and 
in  reliance  upon  such  former  contracts,  they  did  prosecute  and  com- 
plete the  work  in  accordance  with  the  contracts  as  so  modified  by  the 
oral  agreement,  to  the  satisfaction  of  all  parties  in  interest.  That 
such  contracts  and  the  oral  contract  modifying  them  were  duly  ratified 
by  the  defendant,  and  that  the  actual  cost  of  such  construction  was  not 
less  than  $30,000  in -excess  of  the  stipulated  amount  provided  for  in 
the  original  written  contracts. 

It  is  claimed  by  appellant  that  the  complaint  shows  no  consideration 
for  the  alleged  promise  to  pay  extra  compensation  for  the  work ;  that 
it  is  at  best  simply  a  promise  to  pay  the  contractors  an  additional  com- 
pensation if  they  would  do  that  which  they  were  already  legally  bound 


SUFTICIENCY    OK   REALITY   OF   CONSIDEBATION  117 

to  do.  The  general  rule  is  that  a  promise  of  a  party  to  a  contract  to 
do,  or  the  doing  of,  that  which  he  is  already  under  a  legal  obligation  to 
do  by  the  terms  of  the  contract  is  not  a  valid  consideration  to  sup- 
port the  promise  of  the  other  party  to  pay  an  additional  compensation 
for  such  performance.  1  Chit.  Cont.  60;  Pol.  Cont.  176;  Leake,  Cont. 
621.  In  other  words,  a  promise  by  one  party  to  a  subsisting  contract 
to  the  opposite  party  to  prevent  a  breach  of  the  contract  on  his  part 
is  without  consideration.  The  following  cases  sustain  and  illustrate 
the  practical  application  of  the  rule.  Ayres  v.  Railroad  Co.,  52  Iowa, 
478,  3  N.  W.  522;  McCarty  v.  Association,  61  Iowa,  287,  16  N.  W. 
114;  Lingenfelder  v.  Brewing  Co.,  103  Mo.  578,  15  S.  W.  844;  Van- 
derbilt  v.  Schreyer,  91  N.  Y.  392;  Reynolds  v.  Nugent,  25  Ind.  328; 
Robinson  v.  Jewett,  116  N.  Y.  40,  22  N.  E.  224;  Wimer  v.  Worth  Tp., 
104  Pa.  317.  If  the  allegations  of  the  complaint,  when  taken  together, 
are  in  legal  effect  simply  that  the  contractors,  finding  by  the  test  of  ex- 
perience in  the  prosecution  of  the  work  that  they  had  agreed  to  do 
that  which  involved  a  greater  expenditure  of  money  than  they  calcu- 
lated upon,  that  they  had  made  a  losing  contract,  and  thereupon  noti- 
fied the  opposite  party  that  they  were  unable  to  proceed  with  the  work, 
and  he  promised  them  extra  compensation  if  they  would  perform  their 
contract,  the  case  is  within  the  rule  stated,  and!  the  demurrer  ought  to 
have  been  sustained  as  to  the  first  cause  of  action. 

It  is  claimed,  however,  by  the  respondent,  that  such  is  not  the 
proper  construction  of  the  complaint,  and .  that  its  allegations  bring 
the  case  within  the  rule  adopted  in  several  states,  and  at  least  approved 
in  our  own,  to  the  efifect  that  if  one  party  to  a  contract  refuses  to  per- 
form his  part  of  it  unless  promised  some  further  pay  or  benefit  than 
the  contract  provides,  and  such  promise  is  made  by  the  other  party,  it 
is  supported  by  a  valid  consideration,  for  the  making  of  the  new  prom- 
ise shows  a  rescission  of  the  original  contract  and  the  substitution  of 
another.  In  other  words,  that  the  party,  by  refusing  to  perform  his 
contract,  thereby  subjects  himself  to  an  action  for  damages,  and  the 
opposite  party  has  his  election  to  bring  an  action  for  the  recovery  of 
such  damages  or  to  accede  to  the  demands  of  his  adversary  and  make 
the  promise ;  and  if  he  does  so  it  is  a  relinquishment  of  the  original 
contract  and  the  substitution  of  a  new  one.  Munroe  v.  Perkins,  9 
Pick.  (Mass.)  305,  20  Am.  Dec.  475 ;  Bryant  v.  Lord,  19  Minn.  396 
(Gil.  342);  Moore  v.  Locomotive  Works,  14  Mich.  266;  Goebel  v. 
Linn,  47  Mich.  489,  11  N.  W.  284,  41  Am.  Rep.  723 ;  Rogers  v.  Rogers, 
139  Mass.  440,  1  N.  E.  122. 

The  doctrine  of  these  cases  as  it  is  frequently  applied  does  not  com- 
mend itself  either  to  our  judgment  or  our  sense  of  justice,  for  where 
the  refusal  to  perform  and  the  promise  to  pay  extra  compensation  for 
performance  of  the  contract  are  one  transaction,  and  there  are  no  ex- 
ceptional circumstances  making  it  equitable  that  an  increased  compen- 
sation should  be  demanded  and  paid,  no  amount  of  astute  reasoning 
can  change  the  plain  fact  that  the  party  who  refuses  to  perform,  and 


118  CONSIDERATION 

thereby  coerces  a  promise  from  the  other  party  to  the  contract  to  pay 
him  an  increased  compensation  for  doing  that  which  he  is  legally  bound 
to  do,  takes  an  unjustifiable  advantage  of  the  necessities  of  the  other 
party.  To  hold,  under  such  circumstances,  that  the  party  making  the 
promise  for  extra  compensation  is  presumed  to  have  voluntarily  elected 
to  relinquish  and  abandon  all  of  his  rights  under  the  original  contract, 
and  to  substitute  therefor  the  new  or  modified  agreement,  is  to  wholly 
disregard  the  natural  inference  to  be  drawn  from  the  transaction,  and 
invite  parties  to  repudiate  their  contract  obligations  whenever  they 
can  gain  thereby. 

There  can  be  no  legal  presumption  that  such  a  transaction  is  a  vol- 
untary rescission  or  modification  of  the  original  contract,  for  the  natural 
inference  to  be  drawn  from  it  is  otherwise  in  the  absence  of  any  equi- 
table considerations  justifying  the  demand  for  extra  pay.  In  such  a 
case  the  obvious  inference  is  that  the  party  so  refusing  to  perform  his 
contract  is  seeking  to  take  advantage  of  the  necessities  of  the  other  par- 
ty to  force  from  him  a  promise  to  pay  a  further  sum  for  that  which 
he  is  already  legally  entitled  to  receive.  Surely  it  would  be  a  travesty 
on  justice  to  hold  that  the  party  so  making  the  promise  for  extra  pay 
was  estopped  from  asserting  that  the  promise  was  without  consider- 
ation. 

xA.  party  cannot  lay  the  foundation  of  an  estoppel  by  his  own  wrong. 
If  it  be  conceded  that  by  the  new  promise  the  party  obtains  that  which 
he  could  not  compel,  viz.  a  specific  performance  of  the  contract  by  the 
other  party,  still  the  fact  remains  that  the  one  party  has  obtained  there- 
by only  that  which  he  was  legally  entitled  to  receive,  and  the  other 
party  has  done  only  that  which  he  was  legally  bound  to  do.  How, 
then,  can  it  be  said  that  the  legal  rights  or  obligations  of  the  party  are 
changed  by  the  new  promise?  It  is  entirely  competent  for  the  parties 
to  a  contract  to  modify  or  to  waive  their  rights  under  it,  and  ingraft 
new  terms  upon  it,  and  in  such  a  case  the  promise  of  one  party  is  the 
consideration  for  that  of  the  other ;  but  where  the  promise  to  the  one 
is  simply  a  repetition  of  a  subsisting  legal  promise  there  can  be  no 
consideration  for  the  promise  of  the  other  party,  and  there  is  no  war- 
rant for  inferring  that  the  parties  have  voluntarily  rescinded  or  mod- 
ified their  contract.  But  where  the  party  refusing  to  complete  his 
contract  does  so  by  reason  of  some  unforeseen  and  substantial  dif- 
ficulties in  the  performance  of  the  contract,  which  were  not  known  or 
anticipated  by  the  parties  when  the  contract  was  entered  into,  and 
which  cast  upon  him  an  additional  burden  not  contemplated  by  the 
parties,  and  the  opposite  party  promises  him  extra  pay  or  benefits  if 
he  will  complete  his  contract,  and  he  so  promises,  the  promise  to  pay 
is  supported  by  a  valid  consideration. 

In  such  a  case  the  natural  inference  arising  from  the  transaction, 
if  unmodified  by  any  equitable  considerations,  is  rebutted,  and  the  pre- 
sumption arises  that  by  the  voluntary  and  mutual  promises  of  the  par- 
ties tlieir  -respective  rights  and  obligations  under  the  original  contract 


SUTFICIEXCY   OR   REALITY   OF   CONSIDERATION  119 

are  waived,  and  those  of  the  new  or  modified  contract  substituted  for 
them.  Cases  of  this  character  form  an  exception  to  the  general  rule 
that  a  promise  to  do  that  which  a  party  is  already  legally  boundl  to  do 
is  not  a  sufficient  consideration  to  support  a  promise  by  the  other  par- 
ty to  the  contract  to  give  the  former  an  additional  compensation  or 
benefit.     1  Whart.  Cont.  §  500. 

On  the  other  hand,  where  no  unforeseen  additional  burdens  have 
been  cast  upon  a  party  refusing  to  perform  his  contract,  which  make 
his  refusal  to  perform,  unless  promised  further  pay,  equitable,  and 
such  refusal  and  promise  of  extra  pay  are  all  one  transaction,  the 
promise  of  further  compensation  is  without  consideration,  and  the  case 
falls  within  the  general  rule,  and  the  promise  cannot  be  legally  en- 
forced, although  the  other  party  has  completed  his  contract  in  reliance 
upon  it.  This  proposition,  in  our  opinion,  is  correct  on  principle  and 
supported  by  the  weight  of  authority.  What  unforeseen  difficulties  and 
burdens  will  make  a  party's  refusal  to  go  forward  with  his  contract 
equitable,  so  as  to  take  the  case  out  of  the  general  rule  and  bring  it 
within  the  exception,  must  depend  upon  the  facts  of  each  particular 
case.  They  must  be  substantial,  unforeseen,  and  not  within  the  con- 
templation of  the  parties  when  the  contract  was  made.  They  need 
not  be  such  as  would  legally  justify  the  party  in  his  refusal  to  perform 
his  contract,  unless  promised  extra  pay,  or  to  justify  a  court  of  equity 
in  relieving  him  from  the  contract ;  for  they  are  sufficient  if  they  are 
of  such  a  character  as  to  render  the  party's  demand  for  extra  pay 
manifestly  fair,  so  as  to  rebut  all  inference  that  he  is  seeking  to  be 
relieved  from  an  unsatisfactory  contract,  or  to  take  advantage  of  the 
necessities  of  the  opposite  party  to  coerce  from  him  a  promise  for  fur- 
ther compensation.  Inadequacy  of  the  contract  price  which  is  the  re- 
sult of  an  error  of  judgment,  and  not  of  some  excusable  mistake  of 
fact,  is  not  sufficient. 

The  cases  of  r^Ieech  v.  City  of  Buffalo,  29  N.  Y.  198,  where  the  un- 
foreseen difficulty  in  the  execution  of  the  contract  was  quicksand,  in 
place  of  expected  ordinary  earth  excavation,  and  Michaud  v.  McGregor 
(decided  at  the  present  term)  61  Minn.  198,  63  N.  W.  479,  where  the 
unforeseen  obstacles  were  rocks  below  the  surface  of  the  lots  to  be 
excavated,  which  did  not  naturally  belong  there,  but  were  placed  there 
by  a  third  party,  and  of  the  existence  of  which  both  parties  to  the 
contract  were  ignorant  when  the  contract  was  made,  are  illustrations 
of  what  unforeseen  difficulties  will  take  a  case  out  of  the  general  rule. 

Do  the  allegations  of  fact  contained  in  plaintiff's  first  alleged  cause 
of  action  bring  his  case  within  the  exception?  Clearly  not ;  for  elimi- 
nating all  conclusions,  and  considering  only  the  facts  alleged,  there 
is  nothing  to  make  the  case  exceptional,  other  than  the  general  state- 
ment that  the  season  was  so  extraordinary  that  in  order  to  do  the  stipu- 
lated work  it  would  require  great  and  unusual  expense,  involving  a 
large  use  of  powder  and  extra  time  and  labor  for  the  purpose  of  blast- 
ing: out  the  frozen  earth  and  other  material  which  was  encountered. 


120  CONSIDERATION 

What  the  character  of  this  material  was  we  are  not  told,  or  what  the 
other  extraordinary  conditions  of  the  ground  were.  The  court  wilt>; 
take  judicial  knowledge  of  the  fact  that  frozen  ground  on  the  Missabl'^-' 
Range,  where  the  work  was  to  be  performed,  in  the  month  of  Febru- 
ary, is  not  unusual  or  extraordinary.  It  was  a  matter  which  must  have 
been  anticipated  by  the  parties,  and  taken  into  consideration  by  them 
when  this  contract  was  made. 

The  most  that  can  be  claimed  from  the  allegations  of  the  complaint 
is  that  the  contractors  had  made  a  losing^  bargain,  and  refused  to  com- 
plete their  contract,  and  the  defendant,  by  its  representative,  promised 
them  that  if  they  would  go  forward  and  complete*  their  contract  it 
would  pay  them  an  additional  compensation,  so  that  the  total  compen- 
sation should  be  equal  to  the  actual  cost  of  the  work. 

2.  The  second  cause  of  action  is  supported  by  a  different  and  a 
valid  consideration.  It  fairly  appears  from  the  allegations  of  the  com- 
plaint as  to  this  cause  of  action  that  the  defendant,  by  changing  its 
line  and  by  its  defaults,  had  so  far  delayed  the  work  of  construction 
as  to  legally  excuse  the  contractors  from  their  obligation  to  complete 
the  work  within  the  time  originally  agreed  upon,  and  that  to  execute 
the  work  within  such  time  would  involve  an  additional  expense. 
Thereupon,  in  consideration  of  their  waiving  the  defaults  and  the  de- 
lays occasioned  by  the  defendant,  and  promising  to  complete  the  work 
in  time,  so  that  it  could  secure  the  bonds,  it  promised  to  pay  or  give 
to  them  the  extra  compensation.  This  was  a  legal  consideration  for 
such  promise,  and  the  allegations  of  the  second  general  subdivision  of 
the  complaint  state  a  cause  of  action. 

So  much  of  the  order  appealed  from  as  overruled  the  defendant's 
demurrer  to  the  supposed  first  cause  of  action  in  the  plaintiff's  com- 
plaint must  be  reversed,  and  as  to  so  much  of  it  as  overruled  the  de- 
murrer to  the  second  cause  of  action  it  must  be  affirmed,  and  the  case 
remanded  to  the  district  court  of  the  county  of  St.  Louis  with  the  di- 
rection to  modify  the  order  appealed  from  so  as  to  sustain  the  demur- 
rer as  to  the  first  cause  of  action,  with  or  without  leave  to  the  plaintiff 
to  amend,  as  such  court  may  deem  to  be  just.    So  ordered. 


(B)  Part  Payment  in  Satisfaction  of  Debt 


JAFFRAY  et  al.  v.  DAVIS  et  al. 

(Court  of  Appeals  of  New  York,  1S91.     124  N.  Y.  164,  26  N.  E.  351, 
11  L.  R.  A.  710.) 

Potter,  J.  The  facts  found  by  the  trial  court  in  this  case  were 
agreed  upon.  They  are  simple,  and  present  a  familiar  question  of 
law.    The  facts  are  that  defendants  were  owing  plaintiffs,  on  the  Sth 


SUFFICIENCY   OE  REALITY   OF   CONSIDERATION  121 

day  of  December,  1886,  for  goods  sold  between  that  date  and  the  May 
previous,  at  an  agreed  price,  the  sum  of  $7,714.37,  and  that,  on  the 
27th  of  the  same  December,  the  defendants  delivered  to  the  plaintiffs 
their  three  promissory  notes,  amounting,  in  the  aggregate,  to  $3,462.- 
24,  secured  by  a  chattel  mortgage  on  the  stock,  fixtures,  and  other 
property  of  defendants,  located  in  East  Saginaw,  Mich.,  which  said 
notes  and  chattel  mortgage  were  received  by  plaintiffs,  under  an  agree- 
ment to  accept  same,  in  full  satisfaction  and  discharge  of  said  indebt- 
edness; that  said  notes  have  all  been  paid,  and  said  mortgage  dis- 
charged of  record.  The  question  of  law  arising  from  these  facts, 
and  presented  to  this  court  for  its  determination,  is  whether  such 
agreement,  with  full  performance,  constitutes  a  bar  to  this  action, 
which  was  brought  after  such  performance  to  recover  the  balance  of 
^such  indebtedness  over  the  sum  so  secured  and  paid. 

One  of  the  elements  embraced  in  the  question  presented  upon  this 
appeal  is,  viz.,  whether  the  payment  of  a  sum  less  than  the  amount  of  a 
liquidated  debt,  under  an  agreement  to  accept  the  same  in  satisfaction 
of  such  debt,  forms  a  bar  to  the  recovery  of  the  balance  of  the  debt. 
This  single  question  was  presented  to  the  English  court  in  1602,  when 
it  was  resolved,  if  not  decided,  in  Pinnel's  Case,  5  Coke,  117,  "that 
payment  of  a  lesser  sum  on  the  day  in  satisfaction  of  a  greater  cannot 
be  any  satisfaction  for  the  whole,"  and  that  this  is  so,  although  it 
was  agreed  that  such  payment  should  satisfy  the  whole.  This  simple 
question  has  since  arisen  in  the  English  courts,  and  in  the  courts  of 
this  country,  in  almost  numberless  instances,  and  has  received  the 
same  solution,  notwithstanding  the  courts,  while  so  ruling,  have  rarely 
failed  upon  any  recurrence  of  the  question  to  criticise  and  condemn 
its  reasonableness,  justice,  fairness,  or  honesty.  No  respectable  au- 
thority that  I  have  been  able  to  find  has,  after  such  unanimous  dis- 
approval by  all  the  courts,  held  otherwise  than  was  held  in  Pinnel 
Case,  supra,  and  Cumber  v.  Wane,  1  Strange,  426;  Foakes  v.  Beer, 
L.  R.  9  App.  Cas.  605;  Goddard  v.  O'Brien,  (Q.  B.  Div.)  21  Amer. 
Law  Reg.  637,  and  notes. 

The  steadfast  adhesion  to  this  doctrine  by  the  courts,  in  spite  of  the 
current  of  condemnation  by  the  individual  judges  of  the  court,  and  in 
the  face  of  the  demands  and  conveniences  of  a  much  greater  business, 
and  more  extensive  mercantile  dealings  and  operations,  demonstrate 
the  force  of  the  doctrine  of  stare  decisis.  But  the  doctrine  of  stare 
decisis  is  further  illustrated  by  the  course  of  judicial  decisions  upon 
this  subject;  for,  while  the  courts  still  hold  to  the  doctrine  of  the 
Pinnel  and  Cumber-Wane  Cases,  supra,  they  have  seemed  to  seize 
with  avidity  upon  any  consideration  to  support  the  agreement  to  ac- 
cept the  lesser  sum  in  satisfaction  of  the  larger,  or,  in  other  words,  to 
extract,  if  possible,  from  the  circumstances  of  each  case,  a  considera- 
tion for  the  new  agreement,  and  to  substitute  the  new  agreement  in 
place  of  the  old,  and  thus  to  form  a  defense  to  the  action  brought  up- 
on the  old  agreement.    It  will  serve  the  i)urpose  of  illustrating  the  ad- 


122  CONSIDEKATION 

hesion  of  the  court  to  settled  law,  and  at  the  same  time  enable  us, 
perhaps  more  satisfactorily,  to  decide  whether  there  was  a  good  con- 
sideration to  support  the  agreement  in  this  case,  to  refer  to  (the  con- 
sideration in)  a  few  of  the  numerous  cases  which  the  courts  have  held 
to  be  sufficient  to  support  the  new  agreement. 

Lord  Blackburn  said,  in  his  opinion  in  Foakes  v.  Beer,  supra,  and 
while  maintaining  the  doctrine,  "that  a  lesser  sum  cannot  be  a  satis- 
faction of  a  greater  sum,"  "but  the  gift  of  a  horse,  hawk,  or  robe, 
etc.,  in  satisfaction,  is  good,"  quite  regardless  of  the  amount  of  the 
debt ;  and  it  was  further  said  by  him,  in  the  same  opinion,  "that  pay- 
ment and  acceptance  of  a  parcel  before  the  day  of  payment  of  a 
larger  sum  would  be  a  good  satisfaction  in  regard  to  the  circumstance 
of  time;"  "and  so,  if  I  am  bound  in  twenty  pounds  to  pay  you  ten 
pounds  at  Westminster,  and  you  request  me  to  pay  you  five  pounds 
at  the  day,  at  York,  and  you  will  accept  it  in  full  satisfaction  for  the 
whole  ten  pounds,  is  it  a  good  satisfaction?" 

It  was  held  in  Goddard  v.  O'Brien,  9  Q.  B.  Div.  37 :  "A.,  being  in- 
debted to  B.  in  125  pounds  7s.  and  9d.  for  goods  sold  and  delivered, 
gave  B.  a  check  (negotiable,  I  suppose)  for  100  pounds,  payable  on 
demand,  which  B.  accepted  in  satisfaction, — was  a  good  satisfaction." 
Huddleston,  B.,  in  Goddard  v.  O'Brien,  supra,  approved  the  language 
of  the  opinion  in  Sibree  v.  Tripp,  15  Mees.  &  W.  26:  "That  a  ne- 
gotiable security  may  operate,  if  so  given  and  taken,  in  satisfaction  of 
a  debt  of  a  greater  amount ;  the  circumstance  of  negotiability  making 
it  in  fact  a  different  thing,  and  more  advantageous,  than  the  original 
4ebt,  which  was  not  negotiable."  • 

It  was  held  in  Bull  v.  Bull,  43  Conn.  455 :  "And,  although  the  claim 
is  a  money  demand,  liquidated,  and  not  doubtful,  and  it  cannot  be  sat- 
isfied with  a  smaller  sum  of  money,  yet,  if  any  other  personal  property 
IS  received  in  satisfaction,  it  will  be  good,  no  matter  what  the  value." 
And  it  was  held,  in  Cumber  v.  Wane,  supra,  that  a  creditor  can  never 
bind  himself  by  simple  agreement  to  accept  a  smaller  sum  in  lieu  of 
an  ascertained  debt  of  a  larger  amount,  such  agreement  being  nudum 
pactum,  but,  if  there  be  any  benefit,  or  even  any  legal  possibility  of 
benefit,  to  the  creditor  thrown  in,  that  additional  weight  will  turn  the 
scale,  and  render  the  consideration  sufficient  to  support  the  agreement. 

It  was  held  in  Le  Page  v.  McCrea,  1  Wend.  164,  19  Am.  Dec.  469, 
and  in  Boyd  v.  Hitchcock,  20  Johns.  76,  11  Am.  Dec.  247,  that  "giv- 
ing further  security  for  part  of  a  debt,  or  other  security,  though  for  a 
less  sum  than  the  debt,  and  acceptance  of  it  in  full  of  all  demands, 
make  a  valid  accord  and  satisfaction;"  that,  "if  a  debtor  gives  his 
creditor  a  note  indorsed  by  a  third  party  for  a  less  sum  than  the  debt, 
(no  matter  how  much  less,)  but  in  full  satisfaction  of  the  debt,  and 
it  is  received  as  such,  the  transaction  constitutes  a  good  accord  and 
satisfaction."    Varney  v.  Conery,  77  Me.  527,  1  Atl.  683. 

And  so  it  has  been  held  "where,  by  mode  or  time  of  part  payment, 
-iiiferent  than  that  provided  for  in  the  contract,  a  new  benefit  is  or 


SUmCIENCT   OK  BEAUTY   OF   CONSIDERATION  123 

may  be  conferred,  or  a  burden  imposed,  a  new  consideration  arises 
out  of  the  transaction,  and  gives  validity  to  the  agreement  of  the  cred- 
itor." Rose  V.  Hall,  26  Conn.  392,  68  Am.  Dec.  402.  And  so  "pay- 
ment of  less  than  the  whole  debt,  if  made  before  it  is  due,  or  at  a  dif- 
ferent place  from  that  stipulated,  if  received  in  full,  is  a  good  satisfac- 
tion." Jones  V.  Bullitt,  2  Litt.  (Ky.)  49;  Ricketts  v.  Hall,  2  Bush 
(Ky.)  249;  Smith  v.  Brown,  10  N.  C.  580;  Jones  v.  Perkins,  29  Miss. 
139,  64  Am.  Dec.  136;  Schweider  v.  Lang,  29  Minn.  254,  12  N.  W. 
32.  43  Am.  Rep.  202. 

In  Watson  v.  Elliott,  57  N.  H.  511-513,  it  was  held:  "It  is  enough 
that  something  substantial  which  one  party  is  not  bound"  by  law  to  do 
is  done  by  him,  or  something  which  he  has  a  right  to  do  he  abstains 
from  doing,  at  the  request  of  the  other  party,  is  held  a  good  satis- 
faction." 

It  has  been  held  in  a  number  of  cases  that,  if  a  note  be  surrendered 
by  the  payee  to  the  maker,  the  whole  claim  is  discharged  and  no  action 
can  afterwards  be  maintained  on  such  instrument  for  the  unpaid  bal- 
ance. Ellsworth  V.  Fogg,  35  Vt.  355 ;  Kent  v.  Reynolds,  8  Hun,  559. 
It  has  been  held  that  a  partial  payment  made  to  another,  though  at  the 
creditor's  instance  and  request,  is  a  good  discharge  of  the  whole  debt. 
Harper  v.  Graham,  20  Ohio,  106.  "The  reason  of  the  rule  is  that 
the  debtor  in  such  case  has  done  something  more  than  he  was  origi- 
nally bound  to  do,  or,  at  least,  something  different.  It  may  be  more, 
or  it  may  be  less,  as  a  matter  of  fact." 

It  was  held  by  the  supreme  court  of  Pennsylvania  in  Bank  v.  Hus- 
ton, 11  Wkly.  Notes  Cas.  389,  (February  13,  1882:)  The  decided 
advantage  which  a  creditor  acquires  by  the  receipt  of  a  negotiable 
note  for  a  part  of  his  debt,  as  by  the  increased  facilities  of  recovering 
upon  it,  the  presumption  of  a  consideration  for  it,  the  ease  of  dis- 
posing of  it  in  market,  etc.,  was  held  to  furnish  ample  reason  why  it 
should  be  a  valid  discharge  of  a  larger  account  or  open  claim  unne- 
gotiable.  It  has  been  held  that  a  payment  in  advance  of  the  time,  if 
agreed  to,  is  a  full  satisfaction  for  a  larger  claim  not  yet  due.  Brooks 
V.  White,  2  Mete.  (Mass.)  283,  37  Am.  Dec.  95;  Bowker  v.  Childs,  3 
Allen  (Mass.)  434. 

In  some  states,  notably  Maine  and  Georgia,  the  legislature,  in  order 
to  avoid  the  harshness  of  the  rule  under  consideration,  have,  by  stat- 
ute, changed  the  law  upon  that  subject,  by  providing:  "No  action 
can  be  maintained  upon  a  demand  which  has  been  canceled  by  the 
receipt  of  any  sum  of  money  less  than  the  amount  legally  due  thereon, 
or  for  any  good  and  valuable  consideration,  however  small."  Citing 
Weymouth  v.  Babcock,  42  Me.  42.  And  so  in  Gray  v.  Barton,  55  N. 
Y.  68,  14  Am.  Rep.  181,  where  a  debt  of  $820  upon  book-account 
was  satisfied  by  the  payment  of  one  dollar  by  calling  the  balance  a 
"gift,"  though  the  balance  was  not  delivered,  except  by  fiction,  and 
the  receipt  was  in  the  usual  form,  and  was  silent  upon  the  subicct  of 
a  gift,  and  this  case  was  followed  and  referred  to  in  Ferry  v.  :5tcpn- 


124  CONSIDERATION 

ens,  66  N.  Y.  321.  So  it  was  held  in  Mitchell  v.  Wheaton,  46  Conn. 
315,  33  Am.  Rep.  24,  that  the  debtor's  agreement  to  pay,  and  the  pay- 
ment of  $150,  with  the  costs  of  the  suit,  upon  a  liquidated  debt  of 
$299,  satisfied  the  principal  debt. 

These  cases  show  in  a  striking  manner  the  extreme  ingenuity  and 
assiduity  which  the  courts  have  exercised  to  avoid  the  operation  of 
the  "rigid  and  rather  unreasonable  rule  of  the  'old  law,' "  as  it  is 
characterized  in  Johnson  v.  Brannan,  5  Johns.  268-272;  or  as  it  is 
called  in  Kellogg  v.  Richards,  14  Wend<  116,  "technical  and  not  very 
well  supported  by  reason;"  or,  as  may  be  more  practically  stated,  a 
rule  that  "a  bar  of  gold  worth  $100  will  discharge  a  debt  of  $500, 
while  400  gold  dollars  in  current  coin  will  not."  See  note  to  Goddard 
V.  O'Brien,  supra,  in  21  Amer.  Law  Reg.  640,  641. 

The  state  of  the  law  upon  this  subject,  under  the  modification  of 
later  decisions,  both  in  England  and  in  this  country,  would  seem  to  be 
as  expressed  in  Goddard  v.  O'Brien,  supra:  "The  doctrine  in  Cum- 
ber v.  Wane,  is  no  doubt  very  much  qualified  by  Sibree  v.  Tripp,  and 
I  cannot  find  it  better  stated  than  in  1  Smith,  Lead.  Cas.  (7th  Ed.) 
595 :  'The  general  doctrine  in  Cumber  v.  Wane,  and  the  reason  of  all 
the  exceptions  and  distinctions  which  have  been  ingrafted  on  it,  may 
perhaps  be  summed  up  as  follows,  viz. :  That  a  creditor  cannot  bind 
himself  by  a  simple  agreement  to  accept  a  smaller  sum  in  lieu  of  an 
ascertained  debt  of  larger  amount,  such  an  agreement  being  nudum 
pactum.  But,  if  there  be  any  benefit,  or  even  any  legal  possibility  of 
benefit,  to  the  creditor  thrown  in,  that  additional  weight  will  turn  the 
scale,  and  render  the  consideration  sufficient  to  support  the  agree- 
ment.'" Bull  V.  Bull,  43  Conn.  455;  Fisher  v.  May,  2  Bibb  (Ky.) 
449,  5  Am.  Dec.  626;  Reed  v.  Bartlett,  19  Pick.  (Mass.)  273;  Bank 
V.  Geary,  5  Pet.  99-114,"  8  L.  Ed.  60;  Le  Page  v.  McCrea,  1  Wend. 
164,  19  Am.  Dec.  469;  Boyd  v.  Hitchcock,  20  Johns.  76,  11  Am.  Dec. 
247;  Brooks  v.  White,  2  Mete.  (Mass.)  283,  37  Am.  Dec.  95;  Jones 
V.  Perkins,  29  Miss.  139-141,  64  Am.  Dec.  136;  Hall  v.  Smith,  15 
Iowa,  584;  Babcock  v.  Hawkins,  23  Vt.  561. 

In  the  case  at  bar,  the  defendants  gave  their  promissory  notes  upon 
time  for  one-half  the  debt  they  owed  plaintiff,  and  also  gave  plaintiff 
a  chattel  mortgage  on  the  stock,  fixtures,  and  other  personal  property 
of  the  defendants,  under  an  agreement  with  plaintiff  to  accept  the 
same  in  full  satisfaction  and  discharge  of  said  indebtedness.  Defend- 
ants paid  the  notes  as  they  became  due,  and  plaintiff  then  discharged 
the  mortgage.  Under  the  cases  above  cited,  and  upon  principle,  this 
new  agreement  was  supported  by  a  sufficient  consideration  to  make 
it  a  valid  agreement,  and  this  agreement  was,  by  the  parties,  substi- 
tuted in  place  of  the  former.  The  consideration  of  the  new  agree- 
ment was  that  the  plaintiff,  in  place  of  an  open  book-account  for  goods 
sold,  got  the  defendants'  promissory  notes,  probably  negotiable  in 
form,  signed  by  defendants,  thus  saving  the  plaintiff  perhaps  trouble 
or  expense  of  proving  their  account,  and  got  security  upon  all  the 


SUFFICIENCY   OE   REALITY   OF  CONSIDERATION  125 

■defendants'  personal  property  for  the  payment  of  the  sum  specified  in 
the  notes,  where  before  they  had  no  security.  It  was  some  trouble  at 
least,  and  perhaps  some  expense  to  the  defendants  to  execute  and  de- 
liver the  security,  and  they  deprived  themselves  of  the  legal  owner- 
ship, or  of  any  exemptions,  or  the  power  of  disposing  of  this  property, 
and  gave  the  plaintiff  such  ownership,  as  against  the  defendants,  and 
the  claims  thereto  of  defendants'  creditors,  if  there  were  any. 

It  seems  to  me  upon  principle,  and  the  decisions  of  this  state,  (save 
perhaps  Keeler  v.  Salisbury,  33  N.  Y.  653,  and  Platts  v.  Walrath, 
Lalor's  Supp.  59,  which  I  will  notice  further  on,)  and  of  quite  all  of 
the  other  states,  the  transactions  between  the  plaintiff  and  the  de- 
fendants constitute  a  bar  to  this  action.  All  that  is  necessary  to  pro- 
duce satisfaction  of  the  former  agreement  is  a  sufficient  consideration 
to  support  the  substituted  agreement.  The  doctrine  is  fully  sustained 
in  the  opinion  of  Judge  Andrews,  in  Allison  v.  Abendroth,  108  N.  Y. 
470,  15  N.  E.  606,  from  which  I  quote:  "But  it  is  held  that,  where 
there  is  an  independent  consideration,  or  the  creditor  receives  any 
benefit,  or  is  put  in  a  better  position,  or  one  from  which  there  may  be 
legal  possibility  of  benefit  to  which  he  was  not  entitled,  except  for  the 
agreement,  then  the  agreement  is  not  nudum  pactum,  and  the  doc- 
trine of  the  common  law,  to  which  we  have  adverted,  has  no  appli- 
cation." 

Upon  this  distinction  the  cases  rest,  which  hold  that  the  acceptance 
by  the  creditor  in  discharge  of  the  debt  of  a  different  thing  from  that 
contracted  to  be  paid,  although  of  much  less  pecuniary  value  or 
amount,  is  a  good  satisfaction,  as,  for  example,  a  negotiable  instru- 
ment binding  the  debtor  and  a  third  person  for  a  smaller  sum.  Cur 
lewis  v.  Clark,  3  Exch.  375.  Following  the  same  principle,  it  is  held 
that,  when  the  debtor  enters  into  a  new  contract  with  the  creditor  to 
do  something  which  he  was  not  bound  to  do  by  the  original  contract, 
the  new  contract  is  a  good  accord  and  satisfaction,  if  so  agreed.  The 
case  of  accepting  the  sole  liability  of  one  of  two  joint  debtors  or  co- 
partners, in  satisfaction  of  the  joint  or  copartnership  debt,  is  an  illus- 
tration. This  is  held  to  be  a  good  satisfaction,  because  the  sole  lia- 
bility of  one  of  two  debtors  "may  be  more  beneficial  than  the  joint 
liability  of  both,  either  in  respect  of  the  solvency  of  the  parties,  or  the 
convenience  of  the  remedy."  Thompson  v.  Percival,  5  Barn.  &  Adol. 
925.  In  perfect  accord  with  this  principle  is  the  recent  case  in  this 
court  of  Ludington  v.  Bell,  77  N.  Y.  138,  33  Am.  Rep.  601,  in  which 
it  was  held  that  the  acceptance  by  a  creditor  of  the  individual  note 
of  one  of  the  members  of  a  copartnership  after  dissolution,  for  a  por- 
tion of  the  copartnership  debt,  was  a  good  consideration  for  the  cred- 
itor's agreement  to  discharge  the  maker  from  further  liability.  Pardee 
V.  Wood,  8  Hun,  584;   Douglass  v.  White,  3  Barb.  Ch.  621-624. 

Notwithstanding  these  later  and  decisive  authorities,  the  plaintiff 
contends  that  the  giving  of  the  dofcndants*  notes,  with  the  ch.iltrl 
mortgage  security  and  the  payment,  was  an  insufficient  consideration 


126  CONSIDERATION 

to  support  the  new  or  substituted  agreement,  and  cites,  as  authority 
for  such  contention,  the  cases  of  Platts  v.  Walrath,  Lalor's  Sup.  59, 
and  Keeler  v.  Salisbury,  33  N.  Y.  648.  Platts  v.  Walrath  arose  in 
justice  court,  and  the  debt  in  controversy  was  put  forth  as  a  set-off. 
The  remarks  of  the  judge  in  the  former  case  were  quite  obiter,  for 
there  were  various  subjects  in  dispute  upon  the  trial,  and  from  v/hich 
the  justice  might  have  reached  the  conclusion  that  he  did.  The  judge, 
in  the  opinion  relied  upon,  says:  "Looking  at  thei* loose  and  secondary 
character  of  the  evidence  as  stated  in  the  return,  it  was,  perhaps,  a 
question  of  fact  whether  any  mortgage  at  all  was  given,  or  at  least, 
whether,  if  given,  it  was  not  in  terms  a  mere  collateral  security  for 
the  large  note."  "Even  the  mortgage  was  left  to  parol  proof.  Did 
it  refer  to,  and  profess  to  be  a  security  for,  the  note  of  $1,500,  or  that 
sum  less  the  fifty  dollars  agreed  to  be  thrown  off?"  etc. 

There  is  so  much  confusion  and  uncertainty  in  the  case  that  it  was 
not  thought  advisable  to  publish  the  case  in  the  regular  series  of  Re- 
ports. The  case  of  Keeler  v.  Salisbury,  supra,  is  not  to  be  regarded 
as  an  authority  upon  this  question,  or  as  approving  the  case  of  Platts 
v.  Walrath,  supra.  In  the  case  of  Keeler  v.  Salisbury,  the  debtor's 
wife  had  joined  in  the  mortgage  given  by  her  husband,  the  debtor,  to 
effect  the  compromise,  thus  releasing  her  inchoate  right  of  dower. 
The  court  held  that  fact  constituted  a  sufficient  consideration  to  sup- 
port the  new  agreement,  though  the  court,  in  the  course  of  the  opin- 
ion, remarked  that  it  had  been  held  that  the  debtor's  mortgage  would 
not  be  sufficient,  and  referred  to  Platts  v.  Walrath.  But  the  court  did 
not  otherwise  indicate  any  approval  of  that  case,  and  there  was  no 
occasion  to  do  so,  for,  as  before  stated,  the  court  put  its  decision  up- 
on the  fact  that  the  wife  had  joined  in  the  mortgage. 

In  view  of  the  peculiar  facts  in  these  two  cases,  and  the  numerous 
decisions  of  this  and  other  courts  hereinbefore  referred  to,  I  do^  not_ 
regard  them  as  authorities  against  the  defendants'  contention  that  the 
plaintift"'s  action  for  the  balance  of  the  original  debt  is  barred  by  rea- 
son of  the  accord  and  satisfaction,  and  the  judgment  must  be  reversed, 
with  costs.    All  concur. 


4.  Impossibility  and  Vagueness 


HART  V.  GEORGIA  R.  CO. 

(Supreme  Court  of  Georgia,  1897.     101   Ga.  188,  28  S.  B.  6.37.) 

Action  by  Eva  F.  Hart  against  the  Georgia  Railroad  Cornpany.    A 
general  demurrer  to  the  complaint  was  sustained,  and  plaintiff  brings 


error. 


SUFFICIENCY   OR  REALITY   OF  CONSIDERATION  127 

Cobb,  J.  Mrs^^Jjart  sued  the  Geqrgia_.Railroad  Company,  alleging 
in  her  petition  that  the  defendant  was  engaged  as  a  common  carrier 
in  the  carrying  of  passengers,  and  that  an  eating  station  for  the  com- 
fort and  convenience  of  passengers  on  the  road  was  practically  a  ne- 
cessity, and  the  establishment  of  such  a  station  would  be  a  great  ad- 
vantage to  the  road  in  increasing  its  popularity  and  patronage;  that 
the  company^  through  its  duly-authorized  agent  and  officer,  covenanted 
and  agreed'  with  her  that,  if  she  would  erect  at  the  station  of  Union 
Point  aTpermanent  and  first-class  eating  house  for  the  accommodation 
of  the  traveling  public,  and  maintain  the  same  in  a  first-class  manner, 
it,  by  the  patronage  of  its  road,  would  maintain  and  support  the  same. 
In  consideration  of  such  representations  and  promises,  and  of  the 
profTts  anticipated  "frdfn  the  patronage,  she  agreed  to  erect  such  a 
house,  and  maintain  or  cause  it  to  be  maintained  in  first-class  style, 
promising  further  to  accommodate  the  employes  of  said  company 
thereat  for  a  reduced  price,  lo  wit,  25  cents  for  meals,  being  one-half 
the  regular  price.  It  was  further  alleged  that  in  accordance  with  tjie 
terms  of  the  agreement  a  first-class  hotel  was  erected  and  maintained, 
and  that  the  contract  was  fully  performed  on  her  part.  It  was  also 
alleged  that  said  company  discontinued  stopping  its  trains  for  meals 
at  Union  Point  until  only  one  train  was  stopped  for  that  purpose,  the 
patronage  of  which  was  not  sufficient  to  make  the  business  of  main- 
taining an  eating  house  profitable;  that  the  business  was  wholly  de- 
pendent for  support  upon  the  patronage  of  the  trains  of  the  company, 
and  could  not  be  otherwise  sustained;  and  since  the  stopping  of  the 
trains  she  is  unable  to  conduct  the  business  at  all,  and  has  lost  the 
entire  profits  which  could  have  been  derived  therefrom,  to  the  net 
annual  value  of  $4,000.  To  the  declaration  the  defendant  filed  a  gen- 
eral demurrer,  which  was  sustained,  and  the  plaintiff  excepted. 

The  contract  as  declared  on  contained  an  obligation  on  the  part  of 
the  plaintiff  to  erect  "a  permanent  and  first-class  hotel  for  the  accom- 
modation of  the  traveling  public,  and  maintain  the  same  in  a  first- 
class  manner,"  and  the  obligation  on  the  part  of  the  road  that  it,  "by 
the  patronage  of  its  road,  would  maintain  and  support  the  same." 
The  whole  of  the  alleged  parol  contract  is  contained  in  the  words 
quoted.  What  is  a  first-class  hotel?  How  is  a  hotel  maintained  in  a 
first-class  manner?  What  is  the  patronage  of  a  road  running  trains 
day  and  night  at  a  given  point?  Is  the  stopping  of  every  train  neces- 
sary to  maintain  and  support  an  eating  house  at  such  point?  If  not. 
how  many  trains,  and  what  trains?  Suppose  the  plaintiff  had  failed 
to  erect  an  hotel,  what  character  of  building  could  she  have  been  co'ni- 
pelled  to  erect  under  this  contract?  That  she  did  erect  an  hotel  which. 
in  her  opinion,  was  a  first-class  hotel,  and  that  she  did  maintain  the 
i^anie  in  what  she  understood  to  be  a  first-class  manner,  cannot  make 
certain  and  definite  stipulations  in  the  contract  declared  on,  which  are 
otherwise  vague  and  indefinite.  Construing  the  declaration  as  a  whole, 
it   is  impossible  to  determine   with  certainty   what  was  the  contract 


128  CONSIDERATION 

between  the  parties,  and  therefore  it  is  impossible  to  determine  what 
would  be  the  damages  arising  from  a  failure  to  carry  out  the  al- 
leged contract. 

As  the  language  alleged  does  not  make  a  contract  between  the  par- 
ties which  is  capable  of  enforcement,  there  was  no  error  in  dismissing 
the  declaration  on  demurrer.    Judgment  affirmed. 


5.  Consideration  in  Respect  of  Time— Past  Consideration 
(A)  General  Rule 


MOORE  V.  ELMER  et  al. 
(Supreme  Judicial  Court  of  Massachusetts,  1901.    ISO  Mass.  15,  61  N.  E.  259.) 

Bill  by  Josephine  L.  Moore  against  Nelson  L.  Elmer  and  others,  as 
administrators,  etc.     Case  reported,  and  bill  dismissed. 

The  following  is  a  copy  of  the  contract  sued  on:  "Springfield, 
Mass.,  Jan.  11th,  1898.  In  Consideration  of  Business  and  Test  Sit- 
tings Reseived  from  Mme.  Sesemore,  the  Clairvoyant,  otherwise 
known  as  Mrs.  Josephene  L.  Moore  on  Numerous  occasions  I  the  un- 
dersighned  do  hearby  agree  to  give  the  above  naned  Josephene  or  her 
heirs,  if  she  is  not  alive,  the  Balance  of  her  Mortgage  note  whitch  is 
the  Herman  E.  Bogardus  Mortgage  note  of  Jan.  5,  1893,  and  the  In- 
terest on  sane  on  or  after  the  last  day  of  Jan.  1900,  if  my  Death  oc- 
curs before  then  whitch  she  has  this  day  Predicted  and  Claims  to  be 
the  truth,  and  whitch  I  the  undersighned  Strongly  doubt.  Wherein  if 
she  is  right  I  am  willing  to  make  a  Recompense  to  her  as  above  stated, 
but  not  payable  unless  death  Occurs  before  1900.    Willard  Elmer." 

HoEMES,  C.  J.  It  is  hard  to  take  any  view  of  the  supposed  contract 
in  which,  if  it  were  made  upon  consideration  it  would  not  be  a  wager. 
But  there  was  no  consideration.  The  bill  alleges  no  debt  of  Elmer 
to  the  plaintiff  prior  to  the  making  of  the  writing.  It  alleges  only 
that  the  plaintiff  gave  him  sittings  at  his  request.  This  may  or  may 
not  have  been  upon  an  understanding  or  implication  that  he  was  to 
pay  for  them.  If  there  was  such  an  understanding  it  should  have 
been  alleged  or  the  liability  of  Elmer  in  some  way  shown.  If,  as  we 
must  assume  and  as  the  writing  seems  to  imply,  there  was  no  such 
understanding,  the  consideration  was  executed  and  would  not  support 
a  promise  made  at  a  later  time.  The  modern  authorities  which  speak 
of  services  rendered  upon  request  as  supporting  a  promise  must  be 
confined  to  cases  where  the  request  implies  an  undertaking  to  pay, 
and  do  not  mean  that  what  was  done  as  a  mere  favor  can  be  turned 
into  a  consideration  at  a  later  time  by  the  fact  that  it  was  asked  for. 


SUFFICIEXCY    OR   REALITY    OF   CONSIDERATION  129 

See  Langd.  Cas.  Cont.  §  92  et  seq.;  Chamberlin  v.  Whitford,  102 
Mass.  448,  450;  Dearborn  v.  Bowman,  3  Mete.  155,  158;  Johnson  v. 
Kimball,  172  Mass.  398,  400,  52  N.  E.  386. 

It  may  be  added  that  even  if  Elmer  was  under  a  previous  liability 
to  the  plaintiff  it  is  not  alleged  that  the  agreement  sued  upon  was 
received  in  satisfaction  of  it,  either  absolutely  or  conditionally,  and 
this  again  cannot  be  implied  in  favor  of  the  plaintiff's  bill.  It  is  not 
necessary  to  consider  what  further  difficulties  there  might  be  in  the 
way  of  granting  relief.    Bill  dismissed. 


(B)  Exceptions 
(a)  Past  Considebation  Given  at  the  Reqxjist  of  Pbomisob 


See  Moore  v.  Elmer,  supra,  p.  128. 


(b)  Revival  of  Unenforceable  Agreement 


DUSENBURY  v.  HOYT. 

(Court  of  Appeals  of  New  York,  1S73.     53  N.  Y.  521,  13  Am.  Rep.  543.) 

The  action  was  upon  a  promissory  note.  The  defendant  pleaded 
his  discharge  in  bankruptcy.  Upon  the  trial,  after  proof  of  the  dis- 
charge, plaintiff  offered  to  prove  subsequent  promise  of  the  defend- 
ant to  pay  the  note.  Defendant  objected  upon  the  ground  that  the  ac- 
tion was  upon  the  note,  not  upon  the  new  promise.  The  court  sus- 
tained the  objection,  and  directed  a  verdict  for  defendant,  which  was 
rendered  accordingly. '^ 

Andrews,  J.  The  34th  section  of  the  bankrupt  law  declares  that 
z  discharge  in  bankruptcy  releases  the  bankrupt  from  all  debts  prov- 
able under  the  act,  and  that  it  may  be  pleaded  as  a  full  and  complete 
bar  to  all  suits  brought  thereon. 

The  legal  obligation  of  the  bankrupt  is  by  force  of  positive  law  dis- 
charged, and  the  remedy  of  the  creditor  existing  at  the  time  the  dis- 
charge was  granted  to  recover  his  debt  by  suit  is  barred.  But  the  debt 
is  not  paid  by  the  discharge.  The  moral  obligation  of  the  bankrupt 
to  pay  it  remains.    It  is  due  in  conscience,  although  discharged  in  law, 

T  The  statement  of  facts  Is  abrldged- 

TiraOCKM.CONT.— 9 


130  CONSIDERATION 

and  this  moral  obligation,  uniting  with  a  subsequent  promise  by  the 
bankrupt  to  pay  the  debt,  gives  a  right  of  action.  It  was  held  in 
Shippey  v.  Henderson,  14  Johns.  178,  7  Am.  Dec.  458,  that  it  was 
proper  for  the  plaintiff,  when  the  bankrupt  had  promised  to  pay  the 
debt  after  his  discharge,  to  bring  his  action  upon  the  original  demand, 
and  to  reply  the  new  promise  in  avoidance  of  the  discharge  set  out  in 
the  plea.  The  court,  following  the  English  authorities,  said  that  the 
replication  of  the  new  promise  was  not  a  departure  from  the  declara- 
tion, but  supported  it  by  removing  the  bar  interposed  by  the  plea,  and 
that  in  point  of  pleading  it  was  like  the  cases  where  the  defense  of 
infancy  or  the  statute  of  limitations  was  relied  upon.  The  case  of 
Shippey  v.  Henderson  was  followed  in  subsequent  cases,  and  the  doc- 
trine declared  in  it  became,  prior  to  the  Code,  the  settled  law.  McNair 
V.  Gilbert,  3  Wend.  344;  Wait  v.  Alorris,  6  Wend.  394;  Fitzgerald 
V.  Alexander,  19  Wend.  402. 

The  question  whether  the  new  promise  is  the  real  cause  of  action 
and  the  discharged  debt  the  consideration  which  supports  it,  or  whether 
the  new  promise  operates  as  a  waiver  by  the  bankrupt  of  the  defense 
which  the  discharge  gives  him  against  the  original  demand,  has  occa- 
sioned much  diversity  of  judicial  opinion.  The  former  view  was  held 
by  Marcy,  J.,  in  Depuy  v.  Swart,  3  Wend.  139,  20  Am.  Dec.  67?),  and  is 
probably  the  one  best  supported  by  authority.  But,  after  as  before 
the  decision  in  that  case,  the  court  held  that  the  original  demand  might 
be  treated  as  the  cause  of  action,  and  for  the  purpose  of  the  remedy, 
the  decree  in  bankruptcy  was  regarded  as  a  discharge  of  the  debt  sub 
modo  only,  and  the  new  promise  as  a  waiver  of  the  bar  to  the  recovery 
of  the  debt  created  by  the  discharge.  We  are  of  opinion  that  the  rule 
of  pleading,  so  well  settled  and  so  long  established,  should  be  adhered 
to.  The  original  debt  may  still  be  considered  the  cause  of  action  for 
the  purpose  of  the  remedy.  The  objection  that,  as  no  replication  is 
now  required,  the  pleadings  will  not  disclose  the  new  promise,  is  equal- 
ly applicable  where  a  new  promise  is  relied  upon  to  avoid  the  defense 
of  infancy  or  the  statute  of  limitations,  and  in  these  cases  the  plaintiff 
may  now,  as  before  the  Code,  declare  upon  the  original  demand.  Es- 
selstyn  v.  Weeks,  12  N.  Y.  635. 

The  offer  of  the  plaintiff  to  prove  an  unconditional  promise  by  the 
defendant,  after  his  discharge,  to  pay  the  debt,  was  improperly  over- 
ruled, and  the  judgment  should,  for  this  reason,  be  reversed,  and  a 
new  trial  ordered,  with  costs  to  abide  the  event.  All  concur,  except 
FoLGER,  J.,  not  voting.    Judgment  reversed. 


/^  CAPACITY    OF   PARTIES  131 


/ 


CAPACITY  OF  PARTIES 

I.  Infants  ^ 

1.  In   Genkral. 


COLE  V.  PENNOYER. 

(Supreme    Court    of    Illiuois,    1852.      14    111,    158.) 

Cole  commenced  his  action  in  ejectment  to  recover  the  west  half 
of  the  northwest  quarter  of  section  twenty-four,  in  township  thirteen 
north,  range  eleven  west.  Pennoyer  pleaded  not  guilty.  A  trial  was^ 
had  before  Woodson,  Judge,  a  jury  being  waived,  and  judgment  en- 
tered for  Pennoyer  as  of  May  term,  1852,  of  the  Morgan  Circuit  CQurtT 
A  bill  of  exceptions  was  taken,  which  shows  that  the  land  in  question 
was  entered  by  and  patented  to  Cole  when  he  was  about  eighteen 
years  old.  His  father,  George  Cole,  was  in  possession  of  the  land,  and 
his  son,  the  plaintiff  in  error,  resided  with  him  in  1833.  In  that  y£ai:, 
the"  father~sold  the  landTo'one  Arthilr,  on  a  credit,  and  procured!  the 
plaintiff,  then  only  nineteen  years  of  age,  to  make  a  deed,  and  the 
father  silrrehgered  the  possession  of  the  land  to  Arthur.  The  land  was 
never  paid  for.  George  Cole  moved  to  Iowa,  taking  his  son  with  him. 
Stephen  Cole  remained  in  Iowa  and  Missouri  until  1840,  when  he  was 
back  in  Illinois  on  a  visit,  until  about  two  years  before  the  commence- 
ment of  this  suit.  Pennoyer  proved  that  Arthur  sold  said  land,  and 
conveyed  to  one  Masson,  and  gave  him  possession  in  1836,  and  that 
said  land  was  several  times  sold  and  regularly  conveyed  down  to  Pen- 
noyer, and  that  Pennoyer  and  those  under  whom  he  claims,  have  been 
in  actual  possession  of  the  land,  and  paid  all  taxes  since  1839.  That 
Stephen  Cole  became  of  age  in  June,  1835. 

Caton,  J.  The  question  as  to  what  contracts  by  an  infant  are  ab- 
solutely void,  or  only  voidable,  is  one  upon  which  there  has  been  a 
very  considerable  diversity  of  opinion  in  different  courts.  All  agree 
that  the  implied  contracts  of  an  infant  for  necessaries,  are  binding 
upon  him,  as  in  case  of  an  adult,  and  all  agree  that  the  appointment  of 
an  attorney  by  an  infant  is  absolutely  void.  The  difficulty  seems  to 
have  been  in  laying  down  a  rule  by  which  to  determine  satisfactorily 
what  other  contracts  made  by  an  infant  are  void,  or  merely  voidalilc. 

It  was  laid  down  by  Lord  Mansfield,  in  Zouch  v.  Parsons,  3  Burr. 
1794,  that  all  contracts  which  take  effect  by  the  delivery  of  the  infant 

1  For  discussion  of  priiiclplos,  see  CInrJi  on  Contracts  (2d  Ed.)  §§  01-04, 
95-97.  99-101,  105-107,   110,  111,   115.   IIG. 


132  CAPACITY   OF   PARTIES 

himself,  are  voidable,  and  not  void;  and  that  it  is  only  such  acts jis 
take  effect  by  the  delivery  of  another  for  the  infant,  which  are  ab- 
solutely void.  He  denies  the  doctrine  often  asserted,  that  a  lease  by 
an  infant  reserving  no  rent,  or  the  surrender  of  a  lease  without  con- 
sideration, are  void,  as  being  manifestly  prejudicial  to  his  interests; 
and  he  says :  "There  is  no  instance  where  the  other  party  to  a  deed 
can  object  on  account  of  infancy.  Consequently,  the  infant  may  let 
the  surrender  stand,  or  avoid  it ;  which  proves  it  to  be  voidable  only." 
Not  long  after,  in  the  case  of  Keane  V.  Boycott,  2  H.  Black.  511, 
Eyre,  Ch.  J.,  laid  it  down  as  a  rule,  that  those  deeds  which  the  court 
could  see  and  pronounce  to  be  prejudicial  to  the  interests  of  the  infant, 
were  void ;  while  those  which  were  manifestly  to  the  advantage  of  the 
infant,  as  for  necessaries,  were  binding,  while  all  others  were  merely 
voidable,  and  might  be  confirmed  or  repudiated  after  he  attains  his 
majority. 

This  rule  is  approved  by  Chancellor  Kent  in  his  Commentaries,  un- 
derstanding, as  he  evidently  does,  that  it  does  not  conflict  with  the  case 
of  Zouch  V.  Parsons,  for  he  says  the  doctrine  of  that  case  "has  been 
recognized  as  law  in  this  country,  and  is  not  now  to  be  shaken.  On 
the  authority  of  that  case,  even  the  bond  of  an  infant  has  been  held 
to  be  voidable  only,  at  his  election.  It  is  an  equitable  rule,  and  most 
for  the  benefit  of  the  infant,  that  conveyances  to  and  from  himself, 
and  his  contracts,  in  most  cases,  should  be  considered  to  be  voidable." 
2  Kent,  236.  Mr.  Wallace,  in  a  very  learned  note,  where  all  the  cases 
on  the  subject  seem  to  be  collected,  says:  "The  numerous  decisions 
which  have  been  had  in  this  country  justify  the  settlement  of  the  fol- 
lowing definite  rule,  as  one  that  is  subject  to  no  exceptions.  T^ie  only 
contract  binding  on  an  infant  is  the  implied  contract  for  necessaries j 
the  only  act  which  he  isunder  a  legal  incapacity  to  perform,  is  the 
apjx)intment  of  an  attorney.  All  other  acts  and  contracts,  executed  or 
executory,  are  voidable  or  confirmable,  by  turn,  at  his  election." 

If  literally  understood,  there  are  certainly  serious  objections  to  the 
rule,  that  the  court  must,  in  every  case,  inquire  whether  the  deed  is 
for  the  benefit  or  to  the  injury  of  the  infant,  and  thence  determine 
whether  it  is  void  or  voidable.  In  such  an  inquiry,  is  the  court  to  look 
alone  to  the  face  of  the  deed  ?  or  shall  it  inquire  into  the  circumstances 
of  the  transaction?  If  the  former,  the  court  must  often  be  misled,  for 
it  is  frequently  the  case  that  a  deed  for  the  conveyance  of  land  shows 
but  very  little  of  the  true  character  of  the  transaction,  its  object  being 
merely  to  transfer  the  legal  title  without  a  strict, regard  to  the  real  in- 
ducements and  considerations  which  moved  the  party  to  the  conveyance. 
If  the  rule  be  established,  that  the  face  of  the  deed  shall  determine 
whether  it  was  to  the  advantage  or  injury  of  the  infant,  such  deeds  will 
always  be  framed  with  a  view  to  that,  and  will  never  fail  to  show  an 
advantageous  bargain  for  the  minor.  There  are  serious  objections, 
also,  to  requiring  the  court  to  hear  evidence  showing  the  circumstances 


INFANTS  133 

of  the  sale,  and  thence  determine  the  question  of  benefit  or  injury.  In 
the  first  place,  it  would  interrupt  the  regular  progress  of  the  trial,  by 
a  collateral  inquiry  about  facts  which  when  ascertained  might  induce 
one  to  think  the  bargain  advantageous,  while  another  would  think  it 
ruinous  to  the  interest  of  the  infant.  But  in  determining  these  ques- 
tions, a  certain  regard  must  be  had  to  the  interests  of  the  public, — of 
those  who  may  wish  to  purchase  the  estate.  A  subsequent  purchaser 
finding  a  regular  chain  of  title  may  be  required  to  ascertain  whether 
those  through  whose  hands  the  title  has  passed,  were  capable  of  making 
an  obligatory  conveyance,  and  if  he  finds  any  of  them  are  infants,  take 
his  chance  of  a  subsequent  ratification  of  the  conveyance;  but  to  re- 
quire him  to  ascertain  all  the  circumstances  of  the  bargain,  and  from 
these  to  judge  at  his  peril  what  the  opinion  of  courts  might  be  of  its 
beneficial  character,  would  leave  the  common  assurances  of  the  country 
in  quite  too  uncertain  a  condition.  It  is  far  better,  in  our  judgments, 
toehold  all  conversances  made  by  infants  in  person  voidable  only,  to  be 
confirmed  or  repudiated  by  them  as  they  may  choose,  after  they  arrive 
at  jears  of  legal  discretion.  A  review  of  the  authorities  on  this  sub- 
ject, would  show  that  this  rule  has  been  generally,  if  not  universally 
adopted,  and  it  is  certainly  most  to  the  advantage  of  the  infant,  while 
it  least  subserves  the  public  interests.  Lester  v.  Fraser,  Riley,  Eq. 
(S.  C.)  76 ;  Kline  v.  Beebe,  6  Conn.  499 ;  Drake  v.  Ramsay,  5  Ohio, 
251 ;  Freeman  v.  Bradford,  5  Port.  (Ala.)  270;  Breckenridge  v.  Orms- 
by,  1  J.  J.  Marsh.  (Ky.)  236,  19  Am.  Dec.  71 ;  Bool  v.  Mix,  17  Wend. 
(N.  Y.)  120,  31  Am.  Dec.  285;   Gillett  v.  Stanley,  1  Hill  (N.  Y.)  122. 

Were  a  deed  to  be  held  to  be  void,  it  would  be  binding  upon  neither 
party.  The  adult  party  might  repudiate  it  as  well  as  the  infant ;  where- 
as, if  held  to  be  voidable  only,  the  adult  would  be  bound  by  it,  leaving 
it  optional  with  the  infant,  after  he  attains  his  majority,  to  ratify  it 
or  not.  With  this  option  it  cannot  prejudice  his  interest.  ITe  isJeft 
to  claim  the  benefit  of  the  bargain  if  a  good  one,  or  to  reject  it  if  he 
has  been  overreached  or  imposed  upon  in  his  infancy.  We  have  no 
hesitation  in  holding  in  this  case,  that  the  deed)  made  by  the  plaintiff 
during  his  minority  was  voidable,  but  not  void.  He  had  a  right  to 
revoke  it  within  a  reasonable  time  after  he  became  of  age.  There  are 
various  modes  in  which  the  grantor  after  he  becomes  of  age  may  dis- 
affirm a  conveyance  made  during,  his  minority,  one  of  which  is  by 
bringing  an  action  of  ejectment  for  the  premises  conveyed,  as  was  done 
in  this  case.  But  this  should,  no  doubt,  be  done  within  a  reasonable 
time.  Within  what  time  the  party  should  disaffirm  the  act  or  be  con- 
sidered to  have  approved  it,  it  is  unnecessary  to  determine,  at  least  so 
far  as  the  conveyance  of  real  estate  is  concerned,  for  we  have  a  statute 
which  has  settled  that  question  in  this  case. 

The  eighth  section  of  the  twenty-fourth  chapter  of  the  Revised  Stat- 
utes provides  as  follows:  "Every  person  in  the  actual  possession  of 
lands  or  tenements  under  claim  and  color  of  title,  made  in  good  faith, 


134  CAPACITY   OF    PARTIES 

and  who  shall  for  seven  successive  years  continue  in  such  possession 
and  shall  also  during  said  time  pay  all  taxes  legally  assessed  on  such 
lands  or  tenements,  shall  be  held  and  adjudged  to  be  the  legal  owner 
of  said  lands  or  tenements,  to  the  extent  and  according  to  the  purport 
of  his  or  her  paper  title.  All  persons  holding  under  such  possession 
by  purchase,  devise,  or  descent,  before  said  seven  years  shall  have 
expired,  and  who  shall  continue  such  possession,  and  continue  to  pay 
the  taxes  as  aforesaid,  so  as  to  continue  the  possession  and  payment 
of  taxes  for  the  term  aforesaid,  shall  be^entitled  to  the  benefit  of  this 
section."  The  ninth  section  prescribes  the  rule  as  to  vacant  and  un- 
occupied land ;  and  the  tenth  section  exempts  from  the  operation  of 
two  preceding  sections  certain  lands  in  which  the  public  have  an  in- 
terest, and  proceeds:  "Nor  shall  they  extend  to  lands  or  tenements 
when  there  shall  be  an  adverse  title  to  said  land  or  tenements,  and  the 
holder  of  such  adverse  title  is  under  the  age  of  twenty-one  years,  in- 
sane, imprisoned,  feme  covert,  out  of  the  limits  of  the  United  States, 
and  in  the  employment  of  the  United  States,  or  of  this  State:  Pro- 
vided, such  person  shall  commence  an  action  to  recover  such  lands  or 
tenements  so  possessed  as  aforesaid,  within  three  years  after  such  dis- 
abilities herein  enumerated  shall  cease  to  exist,  and  shall  prosecute  such 
action  to  judgment." 

Whether  a  void  deed  would  constitute  such  claim  and  color  of  title 
as  is  contemplated  in  this  statute,  it  is  not  necessary  for  us  now  to 
inquire ;  that  a  deed  which  binds  the  grantee,  and  actually  conveys  the 
legal  title,  and  which  can  only  be  defeated  by  some  affirmative  act,  by 
the  grantor  or  his  representatives  disaffirming  it,  and  which  to  all  the 
rest  of  the  world  is  good  and  valid  for  all  purposes,  does  constitute 
such  claim  and  color  of  title,  we  cannot  doubt.  Should  this  be  held  not 
within  the  provisions  of  the  statute,  it  would  be  difficult  to  find  one  that 
would,  short  of  an  absolute  and  indefeasible  title.  It  was  to  quiet 
po_ssessions  held  in  good  faith,  but  under  defective  titles,  that  this  statute- 
was  passed,  and  not  to  give  security  to  those  who  were  already  secure. 
The  bilTof  exceptions  in  this  case  shows  that  the  plaintiff  executed  the 
deed  in  question  in  1833,  and  that  in  1835,  he  became  twenty-one  years 
of  age,  and  after  the  lapse  of  sixteen  years,  he  commenced  this  action 
for  the  first  time,  so  far  as  we  know,  claiming  the  title  in  opposition  to 
his  deed.  Arthur,  the  immediate  grantor  of  the  plaintiff,  took  posses- 
sion of  the  land.  From  him,  the  title  was  regularly  transferred  to  the 
defendant  in  this  action,  through  several  mesne  conveyances,  which 
were  all  regularly  acknowledged  and  recorded ;  and  those  under  whom 
he  claims,  have  had  the  actual  and  continued  possession,  and  have  paid 
all  taxes  due  thereon  since  1839,  a  period  of  twelve  years  immediately 
antecedent  to  the  commencement  of  this  action.  During  all  of  his  time, 
and  for  the  four  previous  years,  the  plaintiff  had  been  of  age,  and 
legally  capable  of  asserting  his  rights,  had  he  chosen  to  do  so ;  while 
the  statute  requires  that  he  should  have  asserted  them  within  three 


INT  ANTS  135 

years  after  his  disability  was  removed.    It  is  true,  that  this  statute  has 
been  passed  since  he  attained  his  majority,  but  the  defendant  has  held 
possession,  and  paid  the  taxes  more  than  seven  years  since  its  passage, 
and  this  entitles  him  to  the  benefit  of  the  statute. 
The  judgment  of  the  circuit  court  is  affirmed.    Judgment  affirmed. 


2.  Liability  i^or  Necessaries 


McKANNA  et  al.  v.  MERRY. 
(Supreme  Court  of  Illinois,  1871.    61  111.  177.) 

Thornton,  J.  In  1864,  Kate  Feehan,  since  intermarried  with  Mc- 
Kanna,  accompanied  appellee  and  wife  on  a  trip  from  Illinois  to  Cali- 
fornia, by  water.  Her  passage  money  was  paid  by  appellee.  Kate  was 
then  an  infant,  and  under  the  control  of  her  guardian,  who  was  de- 
sirous that  she  should  attend  school  for  another  year,  and  disapproved 
of  the  trip. 

The  only  proof  as  to  the  value  of  her  estate  is  that  it  consisted  of 
an  undivided  one-third  of  some  realty,  which,  after  her  marriage,  and 
a  few  years  after  the  advancement  of  the  money,  was  sold  for  $3250. 

There  is  no  proof  that  this  trip  was  necessary  for  her  health,  or 
that  it  subserved  any  purpose  other  than  pleasure,  or  as  company  for 
the  wife  of  appellee. 

The  court  gave  for  appellee  the  following  instruction :  "What  are 
necessaries  depends  upon  the  circumstances  of  the  case.  If  the  going 
of  defendant,  Kate,  to  California  was  prudent  and  proper,  under  the 
circumstances  proved,  and  the  plaintiff  advanced  money  necessary  to 
take  her  there,  and  the  same  was  for  her  benefit,  then  it  is  for  the 
jury  to  determine  whether  such  advances  of  money  were  for  neces- 
saries." 

There  is  no  positive  rule  by  means  of  which  it  may  be  determined 
what  are  and  what  are  not  necessaries.  Whether  articles  are  of  a  class 
or  kind  for  which  infants  are  liable,  or  whether  certain  subjects  of 
expenditure  are  necessaries,  are  to  be  judged  of  by  the  court.  Wheth- 
er they  come  within  the  particular  class,  and  are  suitable  to  the  con- 
dition and  estate  of  the  infant,  is  to  be  determined  by  the  jury  as  mat- 
ter of  fact.  For  example,  suppose  this  trip  had  been  to  Europe,  in- 
volving, in  time,  several  years,  and  an  expenditure  of  tliousands  of 
dollars,  would  any  court  hesitate  to  decide  that  the  money  thus  ad- 
vanced did  not  constitute  necessaries?     Chit.  Cont.  141a,  note  2;    1 


136  CAPACITY   OF  PARTIES 

Pars.  Cont.  296;   Beeler  v.  Young,  1  Bibb  (Ky.)  519;    1  Am.  Lead. 

Cas.  248. 

The  court,  in  the  instruction,  merely  informed  the  jury  that  if  the 
trip  was  prudent  and  proper,  and  that  the  money  was  for  her  benefit, 
then  the  jury  must  determine  whether  such  advances  of  money  were 
for  necessaries.  There  was  not  a  particle  of  proof  to  enable  the  jury 
to  determine  as  to  the  propriety  or  impropriety,  the  prudence  or  impru- 
dence, of  the  trip,  or  that  the  advancement  of  the  money  was  for  the 
benefit  of  appellant. 

Even  if  there  had  been  such  proof,  the'  instruction  was  wrong.  The 
court  should  have  defined  necessaries  in  some  manner.  Blackstone 
defines  necessaries  to  be  "necessary  meat,  drink,  apparel,  physic,"  and 
says  that  an  infant  may  bind  himself  to  pay  "for  his  good  teaching  and 
instruction,  whereby  he  may  profit  himself  afterwards."  The  articles 
furnished,  or  money  advanced,  must  be  actually  necessary,  in  the  par- 
ticular case,  for  use,  not  mere  ornament;  for  substantial  good,  not 
mere  pleasure ;  and  must  belong  to  the  class  which  the  law  generally 
pronounces  necessary  for  infants. 

The  courts  have  generally  excluded  from  the  term  "necessaries" 
horses,  saddles,  bridles,  pistols,  liquors,  fiddles,  chronometers,  etc.  It 
has  been  held,  however, "that  if  riding  on  horseback  was  necessary  to 
the  health  of  the  infant,  the  rule  was  different. 

We  have  been  referred  to  no  case,  and,  after  a  thorough  examina- 
tion, have  found  none,  in  which  it  has  been  held  that  moneys  advanced 
for  traveling  expenses,  under  the  circumstances  of  this  case,  were  nec- 
essaries. 

The  court  should  have  instructed  the  jury  as  to  the  classes  and  gen- 
eral description  of  articles  for  which  an  infant  is  bound  to  pay.  Then 
the  jury  must  determine  whether  they  fall  within  any  of  the  classes, 
and  whether  they  are  actually  necessary  and  suitable  to  the  estate  and 
condition  of  the  infant. 

It  may  be  proper  to  advert  to  another  principle.  The  infant  had  a 
guardian,  who  had  charge  and  management  of  her  estate,  which  con- 
sisted entirely  of  realty.  It  was  the  duty  of  the  guardian  to  super- 
intend the  education  and  nurture  of  his  ward,  and  apply  to  such  pur- 
pose, first,  the  rents  and  profits  of  the  estate,  and  next  the  interest 
upon  the  ward's  money.  This  is  the  positive  command  of  the  statute, 
and  he  was  liable  upon  his  bond  for  noncompliance.  He  was  the 
judge  of  what  were  necessaries  for  his  ward,  if  he  acted  in  good  faith. 
A  third  party  had  no  right  to  intervene  and  usurp  the  rights  and 
duties  of  the  guardian.  Even  if  the  money  paid  was,  in  some  sense, 
for  the  infant's  benefit,  and  the  trip  was  prudent  and  proper,  yet,  if 
the  guardian,  in  good  faith,  and  in  the  exercise  of  a  wise  discretion, 
and  with  reference  to  the  best  interests  of  his  ward,  supplied  her  wants 
and  contributed  means  suitable  to  her  age  and  station  in  life,  and  in 
view  of  her  estate,  then  the  infant  would  not  be  liable  for  the  money 


INFANTS  137 

as  necessaries.  Beeler  v.  Young,  supra;  Kline  v.  L'Amoureux,  2 
Paige  (N.  Y.)  419,  22  Am.  Dec.  652;  Guthrie  v.  Murphy,  4  Watts 
(Pa.)  80,  28  Am.  Dec.  681 ;  WaiHng  v.  Toll,  9  Johns.  (N.  Y.)  141. 

We  express  no  opinion  as  to  the  weight  of  tlie  evidence,  for  the  rea- 
son that  there  must  be  a  new  trial. 

The  judgment  is  reversed  for  the  errors  indicated,  and  the  cause 
remanded.    Judgment  reversed. 


3.  Ratification  and  AvoidancB 
(A)  Who  may  Avoid  Contract 


MANSFIELD  v.  GORDON. 

(Supreme  Judicial  Court  of  Massachusetts,  1SS7.    144  Mass.  168, 
10  X.   E.  773.) 

Bill  in  equity  to  set  aside  a  mortgage  made  by  one  Burrell,  insolvent 
debtor,  while  a  minor.  Trial  in  the  superior  court  upon  issues  framed 
for  a  jury,  which  found  that  the  mortgagor,  Burrell,  was  a  minor,  un- 
der 21  years  of  age,  when  he  executed  the  mortgage ;  that  he  did  not  at 
the  time  represent  to  the  defendant  that  he  was  21  years  of  age;  and 
that  neither  he  nor  plaintiff  ratified  or  affirmed  said  mortgage  after 
Burrell  became  21  years  of  age,  or  waived  the  objection  of  his  minori- 
ty. After  further  hearing  in  said  court  before  Barker,  J.,  the  bill  was 
dismissed,  and  the  plaintiff  appealed.  Other  facts  appear  in  the  opin- 
ion. 

Devens,  J.  The  plaintiff  by  his  bill  seeks  to  relieve  the  realty  of 
Burrell,  an  insolvent  debtor,  of  whose  estate  he  is  assignee,  from  the 
incumbrance  of  a  mortgage  thereon  conditioned  for  the  payment  of  a 
note  of  $1,000.  The  note  and  mortgage  were  executed  by  Burrell 
when  under  age.  He  is  now  of  age,  and  was  so  when  the  plaintiff  was 
appointed  assignee.  Since  his  majority,  he  has  not  ratified  the  note 
and  mortgage,  nor  is  it  alleged  that  he  has  done  any  act  in  disaffirm- 
ance thereof.  The  assignment  vests  in  the  assignee  not  only  all  the 
property  of  the  debtor,  both  real  and  personal,  which  he  could  law- 
fully have  sold,  assigned,  or  conveyed,  including  debts  due  him  and 
the  securities  therefor,  but  also  "all  his  rights  of  action  for  goods  or 
estate,  real  or  personal."  ''By  the  right  of  action  mentioned  in  the 
statute,"  it  is  said  by  Chief  Justice  Shaw,  "the  legislature  intended  all 
valuable  rights  actually  subsisting,  whether  absolute  or  conditional, 
legal  or  equitable,  which  were  to  be  obtained  by  the  aid  of  any  species 
of  judicial  process."    Gardner  v.  Hooper,  3  Gray,  404, 


138  CAPACITY   OF   PABTIE8 

It  is  the  contention  of  the  plaintiff  that,  by  virtue  of  this  clause,  as 
assignee  he  is  entitled  to  exercise  the  privilege  which  the  insolvent 
might  have  exercised  on  reaching  his  majority,  and  disaffirm  this  mort- 
gage, and  thus  is  entitled  to  a  decree  relieving  the  estate  therefrom. 
That  an  individual  creditor  cannot  attach  property  conveyed  by  a 
debtor  while  a  minor,  the  conveyance  of  which  such  debtor  might  have 
disaffirmed,  and  thus  avail  himself  "of  the  infant's  privilege,  is  well  set- 
tled. McCarty  v.  Murray,  3  Gray,  578;  Kendall  v.  Lawrence,  22 
Pick.  540;  Kingman  v.  Perkins,  105  Mass.  111.  While  the  rights  of 
the  assignee  are  not  always  tested  by  those  of  the  individual  creditor, 
there  would  seem  to  be  no  reason  why  larger  rights  in  an  estate  con- 
veyed by  a  minor  are  obtained  by  an  assignee  acting  on  behalf  of  all 
the  creditors. 

The  contracts  of  an  infant  are  voidable  only,  and  not  void,  and  it 
has  often  been  said  that  the  right  to  avoid  his  contracts  is  a  personal 
privilege  of  the  infant  only,  not  to  be  availed  of  by  others.  Nightin- 
gale V.  Withington,  15  Mass.  272,  8  Am.  Dec.  101 ;  Chandler  v.  Sim- 
mons, 97  Mass.  508-511,  93  Am.  Dec.  117;  1  Chit.  Cont.  (11th  Ed.) 
note  6.  It  is  said  in  Austin  v.  Charlestown  Fem.  Sem.,  8  Mete.  196- 
200,  41  Am.  Dec.  497,  by  Judge  Wilde :  "Voidable  acts  by  an  infant, 
or  matters  of  record  done  or  suffered  by  him,  can  be  avoided  by  none 
but  himself,  or  his  friends  in  blood,  and  not  by  privies  in  estate,  and 
this  right  of  avoidance  is  not  assignable."  Bac.  Abr.  "Infancy  and 
Age,"  1,  6 ;   Whittingham's  Case,  8  Coke,  43. 

It  is  said  that  it  is  for  the  benefit  of  the  debtor  that  the  assignee 
should  be  allowed  to  avoid  his  mortgage,  as  the  assets  of  the  estate  are 
thus  increased.  The  ground  upon  which  an  infant  is  allowed  to  avoid 
his  contracts  is  for  personal  benefit,  and  for  protection  against  the  im- 
providence which  is  the  consequence  of  his  youth.  He  may  therefore 
avoid  his  contract  without  returning  the  consideration  received,  but 
it  is  not  easy  to  see  why  his  creditors,  or  the  assignee  as  representing 
them,  should  have  this  right.  It  may  well  be  that  the  estate  of  the 
insolvent  has  been  augmented  to  that  extent  by  the  very  sum  of  money 
which  the  minor  received. 

The  fact  that  the  infant  may  rescind  without  returning  the  consid- 
eration indicates  that  the  right  is  strictly  a  personal  privilege;  and 
that,  as  the  rule  permitting  him  to  thus  avoid  his  contract  is  estab- 
lished solely  for  his  protection,  so  he  alone  can  have  the  benefit  of  it 
Decree  affirmed. 


INTANTS  139 


(B)  What  Amounts  to  a  Ratification 


THOMPSON  et  al.  v.  LAY  et  ux. 

{Supreme  Judicial   Court   of  Massachusetts,   1826.     4   Pick.   48, 
16   Am.  Dec.  325.) 

Assumpsit  on  the  promise  of  the  wife  before  marriage.  The  de- 
fendants pleaded  the  infancy  of  the  wife.  The  plaintiffs  replied  a 
ratification  after  she  became  of  age  and  before  her  marriage. 

The  plaintiff,  to  prove  a  ratification,  produced  evidence  that  the 
wife,  after  she  was  of  age  and  before  her  marriage,  acknowledged 
she  owed  the  money  on  the  note,  and  said  that  she  had  not  the  means 
of  paying  it  then,  but  that  she  would  pay  it  as  soon  as  she  had  the 
means,  or  as  soon  as  she  should  be  able. 

On  this  evidence  the  defendants  agreed  to  be  defaulted;  but  if  it 
was  insufficient  to  maintain  the  action,  the  default  was  to  be  taken  oft', 
and  the  plaintiffs  were  to  become  nonsuit. 

Parker,  C.  J.,  delivered  the  opinion  of  the  court. 

The  authorities  cited,  especially  the  cases  of  Whitney  v.  Dutch  [14 
Mass.  457,  7  Am.  Dec.  229]  and  Ford  v.  Phillips  [1  Pick.  202],  ex- 
plicitly lay  down  the  principle,  that  the  promise  of  an  infant  cannot 
be  revived,  so  as  to  sustain  an  action,  unless  there  be  an  express  con- 
firmation or  ratification  after  he  comes  of  age. 

Such  a  ratification  may  be  proved  in  divers  ways ;  but  it  cannot  be 
inferred  from  a  mere  acknowledgment  of  debt,  as  in  the  cases  on 
the  statute  of  limitations.  A  promise  to  pay,  is  evidence  of  a  ratifica- 
tion ;  so  is  a  direct  confirmation,  though  not  in  words  amounting  to  a 
direct  promise,  as,  if  the  party  should  say,  after  coming  of  age,  /  do 
ratify  and  confirm,  or,  do  agree  to  pay,  the  debt. 

But  a  ratification  may  he  absolute  or  conditional.  If  it  be  the  latter, 
the  terms  of  the  condition  must  have  happened,  or  been  complied 
with,  before  an  action  can  be  sustained.  /  ratify  and  confirm  my 
promise,  provided  I  receive  a  certain  legacy,  or,  if  I  succeed  to  a  cer- 
tain estate,  or,  if  I  recover  a  certain  sum  of  money,  or,  if  I  drazv  a 
prize  in  a  certain  lottery,  would  make  a  conditional  promise  or  ratifica- 
tion, sufficient  to  make  the  defendant  liable  on  a  contract  made  when 
a  minor,  when  the  events  happen,  but  not  before.  So  an  engagement 
or  promise  to  pay  when  able,  is  a  conditional  promise,  and  the  plaintiff, 
to  avail  himself  of  it,  must  give  in  evidence  the  ability  of  the  defend- 
ant. It  would  not  be  necessary  to  show  an  ability  to  pay  without  in- 
convenience, but  evidence  that  there  is  property  from  which  tiie  debt 
might  be  paid,  or  an  income  from  some  source  which  would  enable  the 
party  to  pay,  would  be  sufficient. 


140  CAPACITY    OF   PARTIES 

The  cases  cited  by  the  plaintiffs'  counsel  are  bottomed  upon  this 
principle.  That  of  Martin  v.  Mayo  [10  Mass.  137,  6  Am.  Dec.  103], 
is  thought  to  be  of  a  different  description,  but  we  understand  the 
court  to  have  there  explicitly  admitted  the  principle,  but  to  have  de- 
cided that  the  words  appended  to  the  promise  did  not  constitute  a  con- 
dition, but  merely  postponed  the  time  of  payment.  If  there  was  any 
error,  which,  however,  we  do  not  perceive,  it  was  not  in  the  principle 
adopted,  but  in  the  construction  of  the  words  of  the  promise. 

Plaintiffs  nonsuit. 

/  


(C)  Return  of  Consideration 


LEMMON  v.  BEEMAN. 

(Supreme  Court  of  Ohio,  1888.     45  Ohio  St.  505,  15  N.  E.  476.) 

William  J.  ^eeman,  the  plaintiff  below,  sued  the  defendant,  James 
F.  Lemmon,  as  administrator,  for  money  paid  by  him  upon  the  pur- 
chase of  a  certain  stock  of  drugs  of  James  Lemmon,  the  defendant's 
decedent,  the  plaintiff  being  a  minor  at  the  time  of  the  purchase,  and 
having  elected,  on  becoming  of  age,  to  rescind  the  contract.  On  the 
trial  of  the  case,  in  the  common  pleas,  the  defendant  excepted  to  a 
part  of  the  charge  of  the  court,  and  took  a  bill  of  exceptions,  setting 
forth  the  evidence  and  the  charge;  to  which  exception  was  taken. 
The  judgment  was  for  the  plaintiff,  and  was  affirmed  in  the  district 
court.  The  part  of  the  charge  to  which  exception  was  taken  is  to  the 
eft'ect  that,  upon  the  facts  of  the  case,  the  plaintiff  could  recover  with- 
out returning  the  property.     The  facts  are  stated  in  the  opinion. 

MiNSHALL,  J.=*  (after  stating  the  facts  as  above.)  In  1881,  Bee- 
man,  then  a  minor,  purchased  of  James  Lemmon,  then  in  life,  but 
since  deceased,  a  certain  stock  of  drugs,  for  which  he  paid  at  the  time 
$400,  the  price  as  agreed  on  between  them.  The  stock  was  in  a  store 
in  the  state  of  Illinois;  and  the  sale  was  made  by  Lemmon,  through 
his  agent.  Dr.  Everett,  who  some  time  before  had  sold  the  stock  to 
Lemmon,  and,  as  his  agent,  had  continued  in  possession  of  the  prop- 
erty, and  conducted  the  business  for  him.  In  a  short  time  after  the 
sale  had  been  made  to  Beeman,  the  goods  were  taken  from  him  under 
an  execution  issued  upon  a  judgment  against  Everett,  upon  the  claim 
of  the  creditor  of  the  latter  that  they  belonged  to  him,  and  not  to 
Lemmon.  Beeman  made  an  effort  to  recover  the  property;  and,  in 
a  short  time  after  he  became  of  age,   (which  was  in  1882,)    disaf- 

2  A  portion  of  the  opinion  Is  omitted. 


INFANTS  141 

firmed  the  contract,  presented  a  claim  to  the  administrator  of  Lem- 
mon's  estate  for  the  money  he  had  paid  on  the  purchase,  and  de- 
manded its  return;   which  was  refused  and  the  claim  rejected. 

No  point  is  made  as  to  the  ownership  of  the  goods ;  it  is  averred  in 
the  petition,  and  must  be  taken  as  the  fact,  that  they  belonged  to  the 
deceased  at  the  time  of  the  sale  to  Beeman.  Again,  there  is  no  room 
for  a  claim,  nor  is  it  made,  that  the  property  purchased  was  in  the 
nature  of  necessaries,  and  the  contract,  for  such  reason,  incapable  of 
being  disaffirmed ;  nor  is  it  claimed  that  the  decedent  or  his  agent 
was  in  any  way  deceived  as  to  the  age  of  Beeman  at  the  time  the  sale 
was  made.  The  only  question  presented  upon  the  record  is  whether, 
upon  the  facts  as  stated,  the  minor  had  the  right,  on  becoming  of  age, 
to  rescind  the  contract,  and  recover  the  consideration  he  had  paid, 
without  returning  the  property  that  had  been  sold  and  delivered  to 
him.  The  true  doctrine  now  seems  to  be  that  the  contract  of  an  infant 
is  in  no  case  absolutely  void.  1  Pars.  Cont.  295,  328 ;  Pol.  Cont.  36 ; 
Harner  v.  Dipple,  31  Ohio  St.  72,  27  Am.  Rep.  496;  Williams  v. 
Moor,  11  Mees.  &  W.  256. 

An  infant  may,  as  a  general  rule,  disaffirm  any  contract  into  which 
he  has  entered;  but,  until  he  does  so,  the  contract  may  be  said  to  sub- 
sist, capable  of  being  made  absolute  by  affirmance,  or  void  by  disaf- 
firmance, on  his  arriving  at  age ;  in  other  words,  infancy  confers  a 
privilege  rather  than  imposes  a  disability.  Hence  the  disaffirmance  of 
a  contract  by  an  infant,  in  the  exercise  of  a  right  similar  to  that  of 
rescission  in  the  case  of  an  adult,  the  ground  being  minority,  inde- 
pendent of  questions  of  fraud  or  mistake.  But,  in  all  else,  the  gen- 
eral doctrine  of  rescission  is  departed  from  no  further  than  is  neces- 
sary to  preserve  the  grounds  upon  which  the  privilege  is  allowed; 
and  is  governed  by  the  maxim  that  infancy  is  a  shield,  and  not  a 
sword.  He  is  not  in  all  cases,  as  is  an  adult,  required  to  restore  the 
opposite  party  to  his  former  condition;  for  if  he  has  lost  or  squan- 
dered the  property  received  by  him  in  the  transaction  that  he  rescinds, 
and  so  is  unable  to  restore  it,  he  may  still  disaffirm  the  contract  and 
recover  back  the  consideration  paid  by  him  without  making  restitu- 
tion; for,  if  it  were  otherwise,  his  privilege  would  be  of  little  avail 
as  shield  against  the  inexperience  and  improvidence  of  youth.  But 
when  the  property  rescinded  by  him  from  the  adult  is  in  his  posses- 
sion, or  under  his  control,  to  permit  him  to  rescind,  without  returning 
it,  or  offering  to  do  so,  would  be  to  permit  him  to  use  his  privilege  as 
a  sword,  rather  than  as  a  shield. 

This  view  is  supported,  not  only  by  reason,  but  by  the  greater  weight 
of  authority.  It  was  recognized  and  applied  by  this  court  in  Cresingcr 
V.  Welch,  15  Ohio,  156,  45  Am.  Dec.  565,  decided  in  1.S46.  The  fol- 
lowing is  the  language  used  by  Mr.  Tyler  on  the  subject:  "If  the 
contract  has  been  executed  by  the  adult,  and  the  infant  has  the  proj)- 
erty  or  consideration  received  at  the  time  he  attains  full  age,  and  he 


142  OAPAdlTY   OF  PARTIES 

then  repudiates  the  transaction,  he  must  return  such  property  or  con- 
sideration, or  its  equivalent,  to  the  adult  party.  If,  however,  the  in- 
fant has  wasted  or  squandered  the  property  or  consideration  received 
during  infancy,  and  on  coming  of  age  repudiates  the  transaction,  the 
adult  party  is  remediless."  He  then  adds  that  "there  are  expressions 
of  judges  and  text  writers  against  this  latter  proposition,  but,"  he 
says,  "the  weight  of  authority  is  in  harmony  with  it,  and  is  decidedly 
in  accord  with  the  general  principles  of  law  for  the  protection  of  in- 
fants." Tyler,  Inf.  (2d  Ed.)  80,  and  cases  cited  by  the  author.  See, 
also,  the  case  of  Price  v.  Furman,  27  Vt.  268,  65  Am.  Dec.  194,  and 
the  notes  thereto  of  Mr.  Ewell,  in  his  Leading  Cases  on  Infancy  and 
Coverture,  119.  After  an  exhaustive  review  of  the  cases,  this  au- 
thor says :  "The  true  doctrine,  and  the  one  supported  by  the  weight  of 
authority,  (at  least  in  the  United  States,)  would  seem  to  be  that 
when  an  infant  disaffirms  his  executed  contract,  after  arriving  at  age, 
and  seeks  a  recovery  of  the  consideration  moving  from  him,  and 
where  the  specific  consideration  received  by  him  remains  in  his  hands, 
in  specie,  at  the  time  of  disaffirmance,  and  is  capable  of  return,  it 
must  be  returned  by  him ;  but  if  he  has,  during  infancy,  wasted,  sold, 
or  otherwise  disposed  of,  or  ceased  to  possess  the  consideration,  and 
has  none  of  it  in  his  hands  in  kind  on  arriving  at  majority,  he  is  not 
liable  therefor,  and  may  disaffirm  without  tendering  or  accounting  for 
such  consideration." 

This  statement  of  the  law,  supported,  as  it  is,  not  only  by  the  great- 
er weight  of  authority,  but  also  of  reason,  meets  with  our  full  approv- 
al. There  is,  however,  much  conflict  in  the  decisions  of  the  different 
states;  greater  perhaps  than  upon  any  other  question  connected  with 
the  law  of  infancy,  (Mete.  Cont.  76;)  but  we  deem  it  unnecessary  to 
attempt  to  review  or  discuss  them,  for  the  very  good  reason,  that  it 
has  been  done  with  thoroughness  and  ability  by  the  authors  just  re- 
ferred to.  See,  also,  the  notes  of  Mr.  Ewell  to  the  recent  case  of 
Adams  v.  Beall,  decided  by  the  Maryland  court  of  appeals,  dl  Md. 
53,  8  Atl.  664,  1  Am.  St.  Rep.  379. 

We  have  been  cited,  by  counsel  for  the  defendant  below,  to  a  num- 
ber of  the  previous  decisions  of  this  court,  supposed  to  affect  the  right 
of  the  plaintiff  to  recover;  but  a  careful  examination  will  disclose  that 
such  is  not  the  case.  *  *  *  It  is  apparent  that  none  of  these  cases, 
when  rightly  considered,  affect  the  right  of  the  plaintiff  to  disaffirm 
the  purchase  made  of  the  decedent,  and  to  recover  the  consideration 
paid.  Neither  he,  nor  any  one  claiming  under  him,  makes  any  claim 
to  the  property  purchased. 

By  his  disaffirmance,  the  title  has  been  restored  to  the  estate  of  the 
vendor,  and  the  property,  or  its  value,  may  be  recovered  by  the  admin- 
istrator, if  it  was  wrongfully  taken  by  the  sheriff  under  the  execution 
against  Everett.    Judgment  affirmed. 


j 


INFANTS  143 


4.  Torts  in  Connection  with  Contracts 


RICE  V.  BOYER. 

(Supreme  Court  of  Indiana,  18S6.    108  Ind.  472,  9  N.  E.  420,  58  Am.  Rep.  53.) 

Elliott,  C.  J.  It  is  alleged  in  the  complaint  of  the  appellant  that  the 
appellee,  with  intent  to  defraud  the  appellant,  falsely  and  fraudulently 
represented  that  he  was  21  years  of  age;  that,  relying  on  this  repre- 
sentation, the  appellant  was  induced  to  sell  and  deliver  to  the  appellee, 
on~one^^ar's  credit,^  buggy  and  a  set  of  harness ;  that  the  appellee, 
in  payment  for  the  property,  delivered  to  appellant  a  buggy,  and  ex- 
ecutedjto  him  a  promissory  note,  payable  one  year  after  date,  and  also 
executed  a  chattel  mortgage  to  secure  the  payment  of  the  note ;  that  the 
appellee^  representation  was  untrue ;  that  he  had  not  attained  the  age 
of  21  years;  that,  on  account  of  appellee's  nonage,  the  note  cannot  be 
enforced ;  that  the  appellee  avoided  his  note  and  mortgage  by  a  sale  of 
the  mortgaged  property,  and  repudiates  and  refuses  to  be  bound  by  his 
contract  in  reference  thereto ;  that  the  appellant  brings  into  court  the 
note  and  mortgage  executed  to  him,  and  tenders  them  to  the  appellee. 
Prayer  for  judgment  for  the  value  of  the  property  delivered  to  appellee. 
To  this  complaint  a  demurrer  was  sustained,  and  error  is  assigned 
on  that  ruling.  . 

The  appellee's  counsel  defend  the  ruling  principally  upon  the  ground 
that  the  action  was  prematurely  brought,  inasmuch  as  it  cannot  be 
determined  that  any  injury  will  be  done  the  appellant  until  the  expira- 
tion of  the  year  fixed  for  the  payment  of  the  property  purchased  of 
the  appellant.  We  agree  with  counsel  that  the  contract  is  voidable, 
not  void,  and  that  the  appellee  might  have  performed  it  notwithstanding 
his  nonage,  if  he  had  so  elected.  Price  v.  Jennings,  62  Ind.  Ill ;  Board, 
etc.,  V.  Anderson,  63  Ind.  367,  30  Am.  Rep.  224;  Shrock  v.  Crowl,  83 
Ind  243. 

But  this  principle  is  not  broad  enough  to  meet  the  averment  of  the 
complaint  that  the  appellee  has  repudiated  his  contract,  and  refuses  to 
be  bound  by  it.  As  the  authorities  relied  on  by  counsel  do  not  fully 
cover  the  case,  further  investigation  is  necessary,  and  the  first  step  in 
this  investigation  is  to  ascertain  and  declare  the  effect  of  the  infant's 
repudiation  of  his  contract. 

In  Shrock  v.  Crowl,  supra',  the  holding  in  Mustard  v.  Wdhlford,  15 
Grat.  (Va.)  329,  76  Am.  Dec.  209,  that,  where  a  voidable  act  of  an 
infant  is  disaffirmed,  it  avoids  the  contract  ab  initio,  is  fully  approved. 
If  this  is  the  law,  then,  when  the  appellee  repudiated  his  contract,  he 
destroyed  it  for  all  purposes.  It  no  longer  bound  him,  nor  could  he 
take  any  benefit  from  it.     If  the  contract  was  destroyed  back  to  the 


144  CAPACITY   OP  PARTIES 

beginning,  it  ceased  to  be  operative  for  anybody's  benefit.  We  think 
the  principle  of  law  is  correctly  stated  in  the  cases  to  which  we  have 
referred,  and  that  the  conclusion  we  have  stated  is  the  logical,  and, 
indeed,  inevitable,  sequence  of  that  principle.     Tyler,  Inf.  78.  ' 

An  infant  may  repudiate  a  contract  respecting  personal  property,  dur- 
ing nonage.  Briggs  v.  McCabe,  27  Ind.  327,  89  Am.  Dec.  503 ;  Manu- 
facturing Co.  V.  Wilcox,  59  Ind.  429 ;  Clark  v.  Van  Court,  100  Ind. 
113,  50  Am.  Rep.  774;  House  v.  Alexander,  105  Ind.  109,  4  N.  E. 
S9l',  55  Am.  Rep.  189;  Hoyt  v.  Wilkinson,  57  Vt.  404;  Price  v.  Fur- 
man  27  Vt.  268,  65  Am.  Dec.  194;  Willis  v.  Twambly,  13  Mass.  204; 
Stafford  v.  Roof,  9  Cow.  (N.  Y.)  628;  Bool  v.  Mix,  17  Wend.  (N.  Y.) 
119,  31  Am.  Dec.  285. 

The  repudiation  by  the  appellee  was  therefore  a  complete  avoidance 
of  t^ie  contract,  effectually  putting  an  end  to  its  existence,  both  as  to 
him,  and  as  to  the  adult  with  whom  he  contracted. 

It  is  evident,  from  what  we  have  said,  that  the  ground!  taken  by  the 
appellee's  counsel  is  not  tenable ;  for,  when  their  client  repudiated  the 
contract,  as  it  is  alleged  he  did  do,  it  ceased  to  be  effective  for  any  pur- 
pose. 

It  is  contended  by  appellee's  counsel  that  the  appellant  cannot  recov- 
er the  value  fixed  on  the  property  by  the  contract,  and  that  the  com- 
plaint is  therefore  insufficient.  There  is  a  plain  fallacy  in  this  argu- 
ment. If  a  complaint  states  facts  entitling  the  plaintiff  to  relief,  it  will 
repel  a  demurrer,  although  it  may  not  entitle  him  to  all  the  relief 
prayed.  Bayless  v.  Glenn,  72  Ind.  5,  and  cases  cited.  The  question  as 
to'the  measure  of  damages  is  not  presented  by  a  demurrer  to  a  com- 
plaint, where  a  cause  of  action  is  presented  entitling  the  plaintiff  to 
some  damages,  for  the  question  which  the  demurrer  presents  is  whether 
the  facts  are  sufficient  to  constitute  a  cause  of  action.  The  material 
and  controlling  question  in  the  case  is  this :  Will  an_action  to  recover^ 
the  actual  loss,  sustained  by  a  plaintiff,  lie  against  an  infant  who. has 
obtained  property  on  the  faith  of  a  false  and  fraudulent  representation 
that  he  is  of  full  age? 

Infants  are,  in  many  cases,  liable  for  torts  committed  by  them,  but 
they  are  not  liable  where  the  wrong  is  connected  with  a  contract,  and 
the  result  of  the  judgment  is  to  indirectly  enforce  the  contract.  Judge 
Cooley  says:  "If  the  wrong  grows  out  of  contract  relations,  and  the 
real  injury  consists  in  the  non-performance  of  the  contract  into  which 
the  party  wronged  has  entered  with  an  infant,  the  law  will  not  permit 
the  former  to  enforce  the  contract  indirectly  by  counting  on  the  in- 
fant's neglect  to  perform  it,  or  omission  of  duty  under  it,  as  a  tort." 
Cooley,  Torts,  116.  In  another  place  the  same  author  says:  "So,  if 
an  infant  effects  a  sale  by  means  of  deception  and  fraud,  his  infancy 
protects  him."  Cooley,  Torts,  107.  Addison,  following  the  English 
cases,  says  an  infant  is  not  liable  "if  the  cause  of  action  is  grounded  on 


INFANTS  145 

a  matter  of  contract  with  the  infant,  and  constitutes  a  breach  of  con- 
tract as  well  as  a  tort."    Add,  Torts,  par.  1314. 

Upon  this  principle  it  has  been  held  in  some  of  the  cases  that  an 
infant  is  not  liable  for  the  value  of  property  obtained  by  means  of  false 
representations.  Howlett  v.  Haswell,  4  Camp.  118;  Green  v.  Green- 
bank,  2  Marsh.  485 ;  Vasse  v.  Smith,  6  Cranch,  226,  3  L.  Ed.  207. 
1  Am.  Lead.  Cas.  237 ;  Studwell  v.  Shapter,  54  N.  Y.  249.  It  is  also 
generally  held  that  an  infant  is  not  estopped  by  a  false  representation 
as  to  his  age ;  but  this  doctrine  rests  upon  the  principle  that  one  under 
the  disability  of  coverture  or  infancy  has  no  power  to  remove  the 
disability  by  a  representation.  Carpenter  v.  Carpenter,  45  Ind.  142; 
Sims  V.  Everhardt,  102  U.  S.  300,  26  L.  Ed.  87 ;  Whitcomb  v.  Joslyn, 
51  Vt.  79,  31  Am.  Rep.  678;  Conrad  v.  Lane,  26  Minn,  389,  4  N.  W. 
695,  Z7  Am.  Rep.  412;  Wieland  v.  Kobick,  110  111.  16,  51  Am.  Rep. 
676;   Ward  v.  Insurance  Co.,  108  Ind.  301,  9  N.  E.  361. 

It  is  evident,  from  this  brief  reference  to  the  authorities,  that  it  is 
not  easy  to  extract  a  principle  that  will  supply  satisfactory  reasons  for 
the  solution  of  the  difficulty  here  presented.  It  is  to  be  expected  that 
"AC  should  find,  as  we  do,  stubborn  conflict  in  the  authorities  as  to  the 
question  here  directly  presented,  namely,  whether  an  action  will  lie 
against  an  infant  for  falsely  representing  himself  to  be  of  full  age. 
Johnson  v.  Pye,  1  Sid.  258;  Price  v.  Hewett,  8  Exch.  146;  Associa- 
tion V.  Fairhurst,  9  Exch.  422 ;  Brown  v.  Dunham,  1  Root  (Conn.) 
272;  Curtin  v.  Patton,  11  Serg.  &  R.  (Pa.)  309;  Homer  v.  Thwing, 
3  Pick.  (Mass.)  492 ;  Vance  v.  Word,  1  Nott  &  McC.  (S.  C.)  197,  9 
Am.  Dec.  683 ;  Fitts  v.  Hall,  9  N.  H.  441 ;  Norris  v.  Vance,  3  Rich. 
(S.  C.)  164;   Gilson  v.  Spear,  38  Vt.  311,  88  Am.  Dec.  659. 

Our  judgment,  however,  is  that,  where  the  infant  does  fraudulently 
and  falsely  represent  that  he  is  of  full  age,  he  is  liable  in  an  action  ex 
delicto  for  the  injury  resulting  from  his  tort.  This  result  does  not 
involve  a  violation  of  the  principle  that  an  infant  is  not  liable  where 
the  consequence  would  be  an  indirect  enforcement  of  his  contract ;  for 
the  recovery  is  not  upon  the  contract,  as  that  is  treated  as  of  no  ef- 
fect, nor  is  he  made  to  pay  the  contract  price  of  the  article  purchased 
by  him,  as  he  is  only  held  to  answer  for  the  actual  loss  caused  by  his 
fraud.  In  holding  him  responsible  for  the  consequences  of  his  wrong, 
an  equitable  conclusion  is  reached,  and  one  which  strictly  harmonizes 
with  the  general  doctrine  that  an  infant  is  liable  for  his  torts.  Nor 
does  our  conclusion  invalidate  the  doctrine  that  an  infant  has  no  power 
to  deny  his  disability;  for  it  concedes  this,  but  affirms  that  he  must 
answer  for  his  positive  fraud. 

Our  conclusion  that  an  infant  is  liable  in  tort  for  the  actual  loss  re- 
sulting from  a  false  and  fraudulent  representation  of  his  age  is  well 
sustained  by  authority,  although,  as  we  have  said,  there  is  a  fierce  con- 
flict, and  it  is  strongly  entrenched  in  principle.    It  has  been  sanctioned 

TUBOCKM.CO.NT. — 10 


146  CAPACITY    OF   PARTIES 

by  this  court,  although,  perhaps,  not  in  a  strictly  authoritative  way; 
for  it  was  said  by  Worclen,  J.,  speaking  for  the  court,  in  Carpenter 
V.  Carpenter,  supra,  that  "the  false  representation  by  the  plaintiff,  as 
alleged,  does  not  make  the  contract  valid,  nor  does  it  estop  the  plaintiff 
to  set  up  his  infancy,  although  it  may  furnish  ground  of  an  action 
against  him  for  tort.  See  1  Pars.  Cont.  317;  2  Kent,  Comm.  (12th 
Ed.)  241."  The  reasoning  of  the  court  in  the  case  of  Pittsburgh,  etc., 
Co.  V.  Adams,  105  Ind.  151,  5  N.  E.  187,  tends  strongly  in  the  same 
direction. 

In  Neff  V.  Landis,  110  Pa.  204,  1  Atl.  177,  it  was  said:  "It  cannot  be 
doubted  that  a  minor  who,  under  such  circumstances,  obtains  the  prop- 
erty of  another,  by  pretending  to  be  of  full  age  and  legally  responsible, 
when  in  fact  he  is  not,  is  guilty  of  a  false  pretense,  for  which  he  is 
answerable  under  the  criminal  law.  2  Whart.  Cr.  Law,  2099."^  If  iT 
be  true,  as  asserted  in  the  case  from  which  we  have  quoted,  that  an 
infant  who  falsely  and  fraudulently  represents  himself  to  be  of  full 
age  is  amenable  to  the  criminal  law,  it  must  be  true  that  he  is  respon- 
sible in  an  action  of  tort  to  the  person  whom  he  has  wronged. 

The  earlier  English  cases  were  undoubtedly  against  our  conclusion, 
but  the  later  cases  seem  to  take  a  different  view  of  the  question.  Thus, 
in  Ex  parte  Unity,  etc.,  Ass'n,  3  De  Gex  &  J.  63,  it  was  held  that,  in 
equity,  an  infant,  who  falsely  and  fraudulently  represented  himself  to 
be  of  full  age,  was  bound  to  pay  the  obligation  entered  into  on  the  faith 
of  his  representation.  In  the  note  to  the  case  of  Humphrey  v.  Doug- 
lass, 33  Am.  Dec.  177,  Air.  Freeman  says,  in  speaking  of  the  decision 
in  Kilgore  v.  Jordan,  17  Tex.  341,  that,  "aside  from  any  question  of 
authority,  the  rule  given  in  the  case  last  cited  by  Hemphill,  C.  J.,  as 
the  rule  of  the  Spanish,  derived  from  the  civil  law,  that  if  a  minor  rep- 
resents himself  to  be  of  age,  and  from  his  person  he  appears  to  be  so, 
he  will  be  bound  by  any  contract  made  with  him,  seems  to  be  most  con- 
sonant with  reason  and  justice."  Mr.  Pomeroy  pushes  the  doctrine 
much  further  than  we  are  required  to  do  here,  for  he  says,  "If  an  in- 
fant procures  an  agreement  to  be  made  through  false  and  fraudulent 
representations  that  he  is  of  age,  a  court  of  equity  will  enforce  his 
liability  as  though  he  were  an  adult,  and  may  cancel  a  conveyance  or 
executed  contract  obtained  by  fraud."    2  Pom.  Eq.  465. 

In  addition  to  cases  cited  which  sustain  our  view  may  be  cited  the 
following  authorities :  Fitts  v.  Hall,  9  N.  H.  441 ;  Eckstein  v.  Frank, 
1  Daly  (N.  Y.)  334;  Schunemann  v.  Paradise,  46  How.  Prac.  (N.  Y.) 
426;   Tyler,  Inf.  182;    1  Pars.  Cont.  317,  note;    1  Story,  Eq.  385. 

The  English  cases  recognize  a  distinction  between  suits  of  equitable 
cognizance  and  actions  at  law,  and  declare  that  a  representation  as  to 
age,  when  falsely  and  fraudulently  made,  will  bind  an  infant  in  equity. 
Ex  parte  Unity,  etc.,  Ass'n,  supra,  and  authorities  cited.  Under  our 
system,  we  can  recognize  no  such  distinction, — a  distinction  which  is,  as 
we  think,  a  shadowy  one  under  any  system,  for,  in  our  system,  the 


INFANTS  147 

rules  of  law  and  equity  are  merged  and  mingled.  Under  such  a  sys- 
tem as  ours,  courts  should  pursue  such  a  course  as  will  render  justice 
to  suitors  under  the  rules  of  equity,  which,  after  all,  are  but  the  em- 
bodiment of  the  principles  of  natural  justice. 

It  cannot  be  the  duty  of  any  court  of  Indiana  to  deny  substantial 
justice  because  the  complaint  states  a  cause  of  action  in  a  peculiar 
form;  for,  under  our  system,  courts  must  render  such  judgments  as 
yield  justice  to  those  who  invoke  their  aid,  irrespective  of  mere  forms, 
in  all  cases  where  the  substantial  facts  are  stated,  and  are  such  as 
entitle  the  party  to  the  general  relief  sought.  They  will  not  inquire 
whether  the  proceeding  which  asks  their  aid  is  at  law  or  in  equity, 
but  they  will  render  justice,  to  those  who  ask  it,  in  the  method  pre- 
scribed by  our  Code  of  Civil  Procedure.  It  is  laid  down  as  a  general 
rule  by  all  the  text  writers_that  infants  are  liaBle  for  their  torts ;  but 
many  of  these  writers,  when  they  come  to  consider  such  a  question  as 
we  have  here,  are  sorely  perplexed  by  the  early  English  decisions,  and, 
by  subtle  refinement,  attempt  to  discriminate  between  pure  torts  and 
torts  connected  with  contracts,  and  to  create  an  artificial  class  of  ac- 
tions.    Their  reasoning  is  not  satisfactory. 

Aside  from  mere  personal  torts,  it  is  scarcely  possible  to  conceive 
a  tort  not  in  some  way  connected  with  a  contract,  and  yet  all  the  au- 
thorities agree  that  the  liability  of  infants  is  not  confined  to  mere  per- 
sonal torts.  There  is  a  connection  between  a  contract  and  a  tort  in 
every  case  of  bailment,  of  the  bargain  and  sale  of  personal  property, 
and  of  the  purchase  and  sale  of  real  estate;  and,  if  an  infant  is  not 
responsible  for  his  fraudulent  representation  of  his  age  in  connection 
with  such  transaction,  there  is  not  within  the  whole  range  of  business 
transactions  any  case  in  which  he  could  be  made  liable  for  his  fraud. 
There  are  many  cases,  far  too  numerous  for  citation,  where  there  is 
some  connection  between  the  contract  and  the  tort,  and  yet  it  is  un- 
hesitatingly held  that  the  infant  is  liable  for  his  tort.  Cooley,  Torts, 
112,  authorities  cited  in  notes. 

The  cases  certainly  do  agree — it  is,  indeed,  difficult,  if  not  impossible, 
to  perceive  how  it  could  be  otherwise — that,  although  there  may  be 
some  connection  between  the  contract  and  the  wrong,  the  infant  may 
be  liable  for  his  tort.  It  seems  to  us  that  the  only  logical  and  defen- 
sible conclusion  is  that  he  is  liable,  to  the  extent  of  the  loss  actually 
sustained,  for  his  tort,  where  a  recovery  can  be  had  without  giving 
effect  fo  his  contract.  The  test,  and  the  only  satisfactory  test,  is  sup- 
plied by  the  answer  to  the  question:  Can  the  infant  be  held  liable 
without  directly  or  indirectly  enforcing  his  promise? 

There  is  no  enforcement  of  a  promise  where  an  infant,  who  has  been 
guilty  of  a  positive  fraud,  is  made  to  answer  for  the  actual  loss  his 
wrong  has  caused  to  ooe  who  has  dealt  with  him  in  good  faith,  anct 
has  exercised  due  diligence;  nor  docs  such  a  rule  open  the  way  for 
designing  men  to  take  advantage  of  an  infant,  for  it  hold^  owt^  u]io 


148  CAPACITY   OF   PARTIES 

contracts  with  an  infant  to  the  exercise  of  good  faith  and  reasonable 
diligence,  and  does  not  enable  him  to  make  any  profit  out  of  the  trans- 
action  with  the  infant,  for  it  allows  him  only  compensation  for  the  ac- 
tual loss  sustained.  It  does  not  permit  him  to  make  any  profit  out  of 
an  executory  contract,  but  it  simply  makes  good  his  actual  loss. 

It  is  worthy  of  observation  that,  in  the  cases  which  hold  that  an  in- 
fant's representation  will  not  estop  him  to  deny  his  disability,  it  is 
generally  declared  that  he  may,  nevertheless,  be  held  liable  for  his  tort. 
It  may  often  happen  that  the  age  and  appearance  of  the  infant  will  be 
such  as  to  preclude  a  recovery  for  a  fraud,  because  reasonable  diligence, 
which  is  exacted  in  all  cases,  would  warn  the  plaintiff  of  the  nonage 
of  the  defendant.  On  the  other  hand,  the  infant  may  be  in  years  al- 
most of  full  age,  and  in  appearance  entirely  so,  and  thus  deceive  the 
most  diligent  by  his  representations.  Suppose  a  minor  who  is  really  20 
years  and  10  months  old,  but  in  appearance  a  man  of  full  age,  should 
obtain  goods  by  falsely  and  fraudulently  representing  that  he  is  21 
years  of  age,  ought  he  not,  on  the  plainest  principles  of  natural  jus- 
tice, to  be  held  liable,  not  on  his  contract,  but  for  the  loss  occasioned 
by  his  fraud  ? 

The  rule  which  we  adopt  will  enable  courts  to  protect,  in  some  meas- 
ure, the  honest  and  diligent,  but  none  other,  who  are  misled  by  a  false 
and  fraudulent  representation ;  and  it  will  not  open  the  way  to  imposi- 
tion upon  infants,  for  in  no  event  can  anything  more  than  the  actual 
loss  sustained  be  recovered,  and  no  person  who  trusts  where  fair  deal- 
ing and  due  diligence  require  him  not  to  trust  can  reap  any  benefit.  It 
will  not  apply  to  an  executory  contract  which  an  infant  refuses  to  per- 
form, for,  in  such  a  case,  the  action  would  be  on  the  promise,  and  the 
only  recovery  that  could  be  had  would  be  for  the  breach  of  contract, 
and  the  terms  of  our  rule  forbid  such  a  result ;  but  it  will  apply  where 
an  infant,  on  the  faith  of  his  false  and  fraudulent  representation,  ob- 
tains property  from  another,  and  then  repudiates  his  contract. 

Any  other  rule  would,  in  many  cases,  suffer  a  person  guilty  of  posi- 
tive fraud  to  escape  loss,  although  his  fraud  had  enabled  him  to  secure 
and  make  way  with  the  property  of  one  who  had  trusted  in  good  faith 
to  his  representation,  and  had  exercised  due  care  and  diligence.  We 
are  unwilling  to  sanction  any  rule  which  will  enable  an  infant,  who  has 
obtained  the  property  of  another  by  falsely  and  fraudulently  represent- 
ing himself  to  be  of  full  age,  to  enjoy  the  fruits  of  his  fraud,  either  by 
keeping  the  property  himself,  or  selling  it  to  another,  and,  when  asked 
to  pay  its  just  and  reasonable  value,  successfully  plead  his  infancy. 
Such  a  rule  would  make  the  defense  of  infancy  both  a  shield  and  a 
sword,  and  this  is  a  result  which  the  principles  of  justice  forbid,  for 
they  require  that  it  should  be  merely  a  shield  of  defense. 

Judgment  reversed,  with  instructions  to  overrule  the  demurrer  to  the 
complaint. 


mSANS  PERSONS  149 

n.  Insane  Persons' 
1.  In  Generai, 


HOVEY  V.  HOBSON. 

(Supreme   Judicial   Court  of  Maine,   1866.     53  Me.   451,   89  Am.   Dec.   705.) 

Appleton,  C.  J.  On  July  27,  1835,  Stephen  Neal,  then  owning  the 
land  in  controversy,  conveyed  the  same  to  Samuel  E.  Crocker,  from 
whom  the  tenant  by  various  mesne  conveyances  derives  his  title. 

On  December  28,  1836,  Stephen  Neal  died,  leaving  Lydia  Dennett, 
then  wife  of  Oliver  Dennett,  his  sole  heiress  at  law.  On  December  18, 
1851,  Oliver  Dennett  died. 

On  July  15,  1858,  Lydia  Dennett  conveyed  the  demanded  premises 
to  the  plaintiff. 

The  plaintiff  introduced  evidence  tending  to  show  that  Stephen  Neal 
at  the  date  of  his  deed  to  Crocker  was  insane,  and  claimed  to  avoid 
said  deed  by  reason  of  such  insanity. 

After  the  testimony  reported  had  been  introduced,  the  presiding  jus- 
tice ruled  "that,  if  Samuel  E.  Crocker  without  fraud,  for  an  adequate 
consideration,  purchased  the  land  of  Stephen  Neal,  and  afterwards 
said  Crocker  and  those  claiming  under  him,  conveyed  said  land  in  good 
faith  until  it  came  into  the  hands  of  the  tenant,  for  a  valuable  con- 
sideration, without  any  knowledge  on  his  part  of  any  defect  in  the 
title,  or  of  any  right  or  claim  of  any  other  person  therein,  then  Mrs. 
Dennett  or  those  claiming  under  her  could  not  avoid  her  father's  deed 
as  against  the  defendant,  on  the  ground  of  his  unsoundness  of  mind ; 
and  that  the  tenant  would  be  entitled  to  a  verdict." 

If  Crocker,  "without  fraud,  for  an  adequate  consideration,  pur- 
chased the  land  of  Stephen  Neal,"  Neal  being  sane,  his  grantees  would 
undoubtedly  acquire  a  good  title.  The  ruling  is  that,  if  insane,  the 
same  result  would  follow,  the  grantees  of  Crocker  being  bona  fide 
purchasers,  and  ignorant  of  the  insanity  of  Neal.  The  questions  there- 
fore arise,  ( 1 )  as  to  the  rights  of  an  insane  man  when  restored  to 
sanity,  or  of  his  heirs  to  avoid,  as  against  his  immediate  grantee,  his 
deed  executed  and  delivered  when  insane;  and,  (2)  as  to  the  rights 
of  those  deriving  a  title  in  good  faith  without  notice,  and  for  a  valid 
consideration  from  such  grantee. 

1,  The  deed  of  an  insane  man  not  under  guardianship  is  not  void 
but  voidable,  and  may  be  confirmed  by  him  if  afterwards  sane,  or  by 
his  heirs.     If  under  guardianship,  the  deed  is  absolutely  void.     Wait 

«  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  ${  117-1-1. 


150  CAPACITY    OF   PARTIES 

V.  Maxwell,  5  Pick.  (Mass.)  219,  16  Am.  Dec.  391.  The  right  of 
avoiding  a  contract  exists,  notwithstanding  the  person  with  whom  the 
insane  man  contracted  was  not  apprized  of  and  had  no  reason  to  sus- 
pect the  existence  of  such  insanity,  and  did  not  overreach  him  by  any 
fraud  or  deception.  Seaver  v.  Phelps,  11  Pick.  (Mass.)  304,  22  Am. 
Dec.  372.  So  an  infant  may  avoid  his  contract,  though  the  person 
dealing  with  him  supposed  him  of'  age  (Van  Winkle  v.  Ketcham,  3 
Caines  [N.  Y.]  323)  ;  or  even  when  he  fraudulently  and  falsely  rep- 
resented himself  of  age.  Conroe  v.  Birdsall,  1  Johns.  Cas.  (N.  Y.) 
127,  1  Am.  Dec.  105.  The  deed  of  an  insane  man  being  voidable,  he 
may  ratify  it  after  he  becomes  sane,  or  his  heirs  after  his  decease. 
Allis  V.  Billings,  6  Mete.  (Mass.)  415,  39  Am.  Dec.  744. 

An  insane  person  or  his  guardian  may  bring  an  action  to  recover 
land  of  which  a  deed  was  made  by  him  while  insane,  without  first 
restoring  the  consideration  to  the  grantee,  the  deed  not  having  since 
been  ratified  nor  confirmed.  Gibson  v.  Soper,  6  Gray  (Mass.)  279,  66 
Am.  Dec.  414.  In  this  case,  the  remark  of  Shaw,  C.  J.,  in  Arnold  v. 
Iron  Works,  1  Gray  (Mass.)  434,  that  if  "the  unfortunate  person 
of  unsound  mind,  coming  to  the  full  possession  of  his  mental  facul- 
ties, desires  to  relieve  himself  from  a  conveyance  made  during  his 
incapacity,  he  must  first  restore  the  price,  if  paid,  or  surrender  the 
contract  for  it,  if  unpaid,"  is  limited  and  restricted  by  Thomas,  J., 
"to  the  case  of  a  grantor  having  in  his  possession  the  notes  which 
were  the  consideration  of  the  deed  and  restored  to  the  full  possession 
of  his  mind." 

In  the  deed  or  other  contract  of  an  insane  man  the  consenting  mind 
is  wanting.  "To  say  that  an  insane  man,"  observes  Thomas,  J.,  "be- 
fore he  can  avoid  a  voidable  deed,  must  first  put  the  grantee  in  statu 
quo,  would  be  to  say,  in  effect,  that,  in  a  large  majority  of  cases,  his 
deed  shall  not  be  avoided  at  all.  The  more  insane  the  grantor  was 
when  the  bargain  was  made,  the  less  likely  will  he  be  to  retain  the 
fruits  of  his  bargain,  so  as  to  be  able  to  make  restitution.  It  would 
be  absurd  to  annul  the  bargain  for  the  mental  incompetency  of  a  party, 
and  yet  to  require  of  him  to  retain  and  manage  the  proceeds  of  his 
sale  so  wisely  and  discreetly  that  they  shall  be  forthcoming,  when 
with  restored  intellect  he  shall  seek  its  annulment."  Lunatics  and 
persons  non  compos  are  not  bound  by  their  contracts,  though  no  fraud 
nor  imposition  has  been  practiced  on  them.  Chew  v.  Bank,  14  Md. 
318. 

The  ruling  presupposes  a  sale  without  fraud  and  for  an  adequate 
consideration.  That  a  grantor  sold  his  land  for  a  fair  price,  that  the 
purchase  money  was  fully  secured,  that  in  the  transaction  he  evinced 
by  his  conduct  a  knowledge  of  the  value  of  his  property  and  capacity 
in  its  management,  would  go  far  to  negative  an  utter  incompetency 
to  contract,  inferable  only  from  a  loss  of  memory  common  to  old  age 
or  from  a  disregard  of  the  decencies  or  courtesies  of  life.     So  the 


INSANE   PERSONS  151 

conversion  by  a  feeble  old  man  past  labor,  of  property  unproductive 
and  burdened  by  taxation,  into  notes  well  secured  and  bringing  an 
annual  income,  would  hardly  be  deemed  proof  of  utter  imbecility,  if 
the  price  was  equal  to  the  fair  market  value  of  the  property  sold. 

As  the  deed  of  an  insane  man  is  voidable  only,  it  follows  that  it  is 
capable  of  subsequent  ratification  by  the  grantor  if  he  be  restored  to 
reason,  or  by  his  heirs.  The  retention  of  the  notes  after  such  restora- 
tion and  the  receiving  payments  on  them,  would  be  evidence  of  such 
ratification.  In  the  analogous  case  of  infancy,  it  seems  that  there  may 
be  an  acquiescence  by  the  grantor  under  such  circumstances  as  would 
amount  to  an  equitable  estoppel.  In  Wallace's  Lessee  v.  Lewis,  4 
Har.  (Del.)  75,  it  was  held,  that  an  infant's  acquiescence  in  a  convey- 
ance for  four  years  after  age  and  seeing  the  property  extensively 
improved,  would  be  a  confirmation.  Though  mere  lapse  of  time  will 
not  amount  to  a  confirmation,  unless  continued  for  twenty  years,  yet 
in  connection  with  other  circumstances  it  may  amount  to  a  ratifica- 
tion. Cresinger  v.  Welch,  15  Ohio,  156,  45  Am.  Dec.  565;  Wheaton 
V.  East,  5  Yerg.  (Tenn.)  41,  26  Am.  Dec.  251.  Whether,  in  the  case 
before  us,  the  deed  of  Stephen  Neal  has  been  affirmed  by  the  recep- 
tion, by  those  authorized,  of  the  purchase  money  for  the  land,  or  the 
heir  at  law  after  the  death  of  her  husband  or  the  passage  of  the  laws 
in  relation  to  married  women  is  equitably  estopped  by  her  omission 
to  act  under  circumstances  which  required  action  on  her  part,  are  ques- 
tions which  at  this  time  are  not  pressing  for  consideration. 

It  is  true  the  English  courts  adopt  a  somewhat  different  doctrine 
from  that  of  the  American  courts  as  to  the  right  of  an  insane  man 
when  sane,  or  of  his  heirs  to  avoid  a  deed  or  contract  executed  when 
insane.  Thus,  in  Selby  v.  Jackson,  6  Beav.  200,  Lord  Langdale  re- 
fused to  set  aside  a  deed  executed  in  good  faith  by  an  insane  man  and 
for  an  adequate  consideration,  when  the  parties  could  not  be  rein- 
stated. "There  are,"  observes  Tuck,  J.,  in  Chew  v.  Bank,  14  Md.  318, 
"many  cases  in  England  to  show  that  such  persons  are  held  by  their 
contracts  unless  fraud  and  imposition  have  been  practiced,  but  to  this 
we  cannot  assent.  The  doctrine  in  this  country  is  the  other  way,  and, 
as  we  think,  is  sustained  by  better  reasoning  than  the  English  rule  as 
announced  in  some  of  their  decisions.  The  eft'ect  in  many  cases  would 
be  to  place  lunatics  on  the  same  footing  with  persons  of  sound  mind, 
with  less  effective  means  to  protect  the  injured  party  against  the  fraud, 
for  at  law,  as  well  as  in  equity,  fraud  or  imposition  may  be  relied  on, 
without  reference  to  the  mental  capacity  of  the  parties  except  so  far 
as  such  defect  may  give  weight  to  other  facts,  from  which  the  fraud 
may  be  deduced." 

The  ruling,  however,  in  the  case  at  bar,  is  not  in  acconlance  with 
that  of  the  English  courts,  which  require  that,  in  addition  to  good 
faith  and  a  full  consideration,  the  person  contracting  should'  be  ap- 
parently of  sound  mind,  and  not  known  to  be  othcrwisrc  to  the  parly 


152  CAPACITY   OF   PARTIES 

with  whom  he  contracts.     Molton  v.  Camroux,  2  Exch.  487.     These 
elements  are  not  required  by  the  ruhng  under  consideration. 

2.  It  is  insisted,  even  if  the  deed  of  Neal  might  have  been  avoided 
as  between  the  original  grantor  and  grantee,  that  this  right  of  avoid- 
ance ceases  when  the  title  has  passed  into  the  hands  of  third  persons 
in  good  faith,  for  an  adequate  consideration,  and  ignorant  of  any 
facts  tending  to  impeach  such  title. 

It  is  apparent  that  the  protection  of  the  insane  and  the  idiotic  will 
be  materially  diminished,  if  the  heirs  cannot  follow  the  property  con- 
veyed, but  are  limited  in  their  right  of  avoidance  to  the  immediate 
grantee  of  such  insane  or  idiotic  person. 

The  acts  of  lunatics  and  infants  are  treated  as  analogous,  and  sub- 
ject to  the  same  rules.  Key  v.  Davis,  1  Md.  32;  Hume  v.  Barton,  1 
Ridg.  PI.  77.  "The  grants  of  infants  and  persons  non  compos  are 
parallel  both  in  law  and  reason."    Thompson  v.  Leach,  3  Mod.  310. 

The  law  is  well  settled  that  a  minor  when  of  age  may  avoid  his 
deed  given  when  an  infant.  He  may  do  this  not  merely  against  his 
grantee,  but  he  may  follow  the  title  wherever  it  may  be  found  and 
recover  his  land.  "It  may  be  objected,"  observes  Marshall,  J.,  in 
Myers  v.  Sanders'  Heirs,  7  Dana  (Ky.)  524,  "that  these  restrictions 
upon  the  right  of  an  adult  to  avoid  his  deed  obtained  by  fraud  are 
inconsistent  with  the  principle  which  allows  an  infant  to  avoid  his 
deed,  into  whose  hands  soever  the  bill  may  have  passed  and  without 
regard  to  time,  except  as  a  statutory  bar  running  after  he  becomes  of 
age.  But,  waiving  the  inquiry  how  far  the  mere  acquiescence  of  an 
infant  grantee  after  he  becomes  of  age  may  determine  his  right  of  re- 
voking his  title  from  the  hands  of  a  purchaser  for  value,  who  has  ac- 
quired it  after  such  acquiescence,  we  think  the  analogy  between  the 
cases  is  too  slight  to  have  any  decisive  influence  upon  the  present  ques- 
tion. The  right  of  an  infant  to  avoid  his  deed  is  an  absolute  uncon- 
trollable privilege,  founded  upon  an  incapacity  conclusively  fixed  by 
the  law  to  bind  himself  absolutely  by  deed  or  to  pass  an  indefeasible 
title.  These  principles  are  irreversibly  fixed  by  the  law,  and  it  en- 
forces them  without  inquiring  into  particular  circumstances,  and  with- 
out regard  to  consequences.  It  must  do  so  in  order  to  maintain  them. 
The  right  of  an  adult  grantor,  to  avoid  his  deed  for  fraud,  stands  upon 
an  entirely  different  basis.  It  grows  out  of  the  particular  circumstanc- 
es; it  is  founded  in  a  regard  to  justice  between  man  and  man;  it  is 
given  as  a  remedy  for  the  hardship  of  his  case.  In  its  very  foundation 
and  essence,  it  is  limited  by  the  justice  which  is  due  to  others,  and 
therefore  cannot  be  exercised  without  a  regard  to  their  rights  and  in- 
terests." 

"But  again,  infancy  is  not,  like  fraud,  a  circumstance  wholly  ex- 
traneous from  the  title.  The  deed  shows  who  the  grantee  is ;  the  pur- 
chaser knows  that  an  infant  grantee  cannot  pass  an  indefeasible  title ; 
he  is  bound  to  know  the  identity  of  the  person,  who  assumes  to  con- 


INSANE   PERSONS  153 

vey  the  title ;  and  it  is  not  an  unreasonable  requisition  that  he  shall 
know  whether  the  grantee,  under  whom  he  claims  title,  is  under  in- 
capacity or  not.  In  this  view  of  the  subject,  no  purchaser  under  an 
infant's  deed  is  innocent  in  the  eye  of  the  law,  until  the  title  has  been 
confirmed  by  the  matured  consent  of  the  grantor."  In  Bool  v.  Mix, 
17  Wend.  (N.  Y.)  119,  31  Am.  Dec.  285,  the  suit  was  against  one 
claiming  by  a  title  derived  from  the  grantee  of  the  minor,  but  the 
ground  was  not  taken  that  in  consequence  thereof  the  tenant  had  an 
indefeasible  title. 

The  principles  applicable  to  deeds  voidable  for  the  infancy  of  the 
grantor  are  equally  applicable  where  the  grantor  is  insane.  When  a 
man  is  defrauded,  he  may,  as  against  his  grantee,  avoid  his  deed,  but 
not  against  those  deriving  in  good  faith  and  for  an  adequate  consid- 
eration a  title  from  such  grantee.  He  has  the  ability  to  convey  an 
indefeasible  title, — and  he  does  convey  such  title  to  all  bona  fide 
purchasers  from  his  grantee.  The  insane  man  has  not  the  power  to 
convey  such  indefeasible  title.  This  incapacity  inheres  in  all  titles 
derived  from  him.  The  grantee,  whose  title  is  thus  derived,  must  rely 
on  the  covenants  of  his  deed.  He  risks  the  capacity  to  convey  of  all 
through  whom  his  title  has  passed.  The  right  of  infants  and  of  the 
insane  alike  to  avoid  their  contracts  is  an  absolute  and  paramount 
right,  superior  to  all  equities  of  other  persons,  and  may  be  exercised 
against  bona  fide  purchasers  from  the  grantee.    1  Am.  Lead.  Cas.  259. 

Exceptions  sustained.     The  case  to  stand  for  trial. 


2.  Ratification  and  Avoidance 


MUTUAL  LIFE  INS.  CO.  v.  HUNT. 

(Court  of  Appeals  of  New  York,   1879.     79  N.  T.  541.) 

DanFurth,  J.  The  action  is  for  the  foreclosure  of  a  bond  and 
mortgage,  dated  April  2Z,  1870,  and  then  executed  by  the  defendant 
Hunt  for  the  purpose  of  securing  to  the  plaintiff  the  payment  of  $4,- 
000  on  the  1st  of  September,  1871.  The  complaint  shows  that  inter- 
est was  paid  on  the  1st  of  March,  1871,  but  default  made  in  September 
following;  that  in  December,  1871,  the  defendant  Hunt  was  adjudged 
a  lunatic,  and  Arnold  H.  Wagner  appointed  committee  of  her  person 
and  estate.  He  was  made  co-defendant  with  her;  and  in  her  behalf, 
and  by  way  of  defense,  alleges  "that  at  the  time  of  the  execution  of 
the  bond  and  mortgage  she  was  a  lunatic,  and  incapable  of  making  or 
executing  them." 


154  CAPACITY   OF   PARTIES 

The  issue  thus  presented  was  tried  before  a  careful  and  experi- 
enced judge  at  special  term  and  he  found  as  a  fact:  "That  at  the 
time  of  the  execution  and  delivery  of  the  bond  and  mortgage,  the  said 
Camilla  Hunt  was  of  sound  mind,  and  was  capable  of  making  and 
executing  said  bond  and  mortgage,"  and  ordered  judgment  in  accord- 
ance with  the  prayer  of  the  complaint.  The  finding  is  well  warranted 
by  the  evidence,  and  upon  this  ground  alone  we  should  be  required  to 
afifirm  the  judgment. 

But  the  learned  court  at  general  term  went  beyond  it  and  for  the 
purposes  of  the  appeal  assumed,  without  deciding  the  contrary  of 
the  finding  to  be  the  truth,  yet  held  that  as  the  case  presented  a  con- 
tract executed  upon  a  valuable  consideration,  of  which  the  lunatic 
had  the  benefit,  made  by  the  plaintiff  "in  good  faith,  without  fraud  or 
unfairness,  without  knowledge  of  the  insanity,  and  without  notice  or 
information  calling  for  inquiry,"  the  plaintiff  was  entitled  to  recover. 
The  correctness  of  this  conclusion  is  strenuously  assailed  by  the 
learned  counsel  for  the  appellant,  but  both  upon  principle  and  au- 
thority we  think  it  must  be  sustained.  Upon  principle  because  the 
plaintiff's  money  was  had  by  the  defendant,  appropriated  to  her  use, 
and  thus  tended  to  increase  the  body  of  her  estate,  and  although  in 
some  cases  a  man  may  now,  notwithstanding  the  old  common-law  max- 
im to  the  contrary  (Beverly's  Case,  2  Coke,  568,  pt.  4,  123b),  "be  ad- 
mitted to  stultify  himself"  yet  he  cannot  do  so  to  the  prejudice  of 
others,  for  he  would  thus  make  his  own  misfortune  an  excuse  for 
fraud,  and  against  that  the  doctrine  of  the  maxim  stands  unaffected 
by  any  exception.  1  Story,  Eq.  Jur.  §  226.  In  this  case  the  loan 
was  made  in  the  ordinary  course  of  business;  it  was  a  fair  and  rea- 
sonable transaction;  the  defendant  acted  for  herself,  but  with  the 
aid  of  an  attorney;  if  mental  unsoundness  existed  it  was  not  known 
to  the  plaintiff,  and  the  parties  cannot  now  be  put  in  statu  quo.  The 
defendant  was  therefore  properly  held  liable. 

Very  much  in  point  and  upon  circumstances  similar  to  those  above 
stated  was  Molton  v.  Camroux,  2  Welsh.  H.  &  G.  487 ;  affirmed  in  er- 
ror, 4  Welsh.  H.  &  G.  17,  Concerning  it  the  chancellor,  in  Elliott  v. 
Ince,  7  De  Gex,  M.  &  G.  487,  says :  "The  principle  of  that  case  was 
very  sound,  viz. :  that  an  executed  contract,  when  parties  have  been 
dealing  fairly  and  in  ignorance  of  the  lunacy,  shall  not  afterward 
be  set  aside ;  that  was  a  decision  of  necessity,  and  a  contrary  doctrine 
would  render  all  ordinary  dealings  between  man  and  man  unsafe." 
And  so  it  has  been  held,  and  like  contracts  enforced  upon  the  same 
principle,  in  repeated  instances,  in  the  courts  of  this  and  other  states. 
Loomis  V.  Spencer,  2  Paige,  153 ;  Matter  of  Beckwith,  3  Hun,  443 ; 
Canfield  v.  Fairbanks,  63  Barb.  461 ;  Bank  v.  Moore,  78  Pa.  407,  21 
Am.  Rep.  24;  Wilder  v.  Weakley,  34  Ind.  181;  Matthiessen  v.  Mc- 
Mahon,  38  N.  J.  Law,  536;  Behrens  v.  McKenzie,  23  Iowa,  333,  92 
Am.  Dec.  428. 


DRUNKEN   PERSONS  155 

These  cases  stand  on  the  maxim  "that  he  who  seeks  equity  must 
do  equity,"  and  it  is  appHcable  to  the  case  in  hand ;  for  the  defendant 
seeks  to  deprive  the  plaintiff  of  its  remedies  to  enforce  the  security 
while  she  retains  the  benefit  of  the  contract.  This  is  so  plainly  in- 
equitable and  unjust  as  to  render  a  further  discussion  unnecessary. 
Nor  does  the  fact  that  the  borrower  was  subsequently,  upon  inquisi- 
tion taken,  declared  to  be  insane,  alter  the  result.  Such  proceeding 
has  no  effect  upon  a  contract  made  without  such  notice,  and  on  the 
faith  of  the  presumption  that  the  person  contracted  with  was  of 
competent  understanding. 

The  judgment  should  be  affirmed.    All  concur.    Judgment  affirmed. 


III.  Drunken  Persons  * 


BARRETT  v.  BUXTON. 
(Supreme   Court  of   Vermont,   1826.     2   Aikens,   167,   16   Am.   Dec.   691.) 

Prentiss,  J.''  This  is  an  action  upon  a  promissory  note,  executed 
by  the  defendant  to  the  plaintiff  for  the  sum  of  $1000,  being  the  dif- 
ference agreed  to  be  paid  the  plaintiff  on  a  contract  for  the  exchange 
of  lands.  The  agreement  of  exchange  was  in  writing,  and  the  plain- 
tiff afterwards  tendered  to  the  defendant  a  deed,  in  performance  of 
his  part  of  the  agreement,  which  the  defendant  refused.  The  de- 
fendant offered  evidence  to  prove,  that  at  the  time  of  executing  the 
note  and  agreement,  he  was  intoxicated,  and  thereby  incapable  of 
judging  of  the  nature  and  consequences  of  the  bargain.  I'he  court 
refused  to  admit  the  evidence,  without  proof  that  the  intoxication 
was  procured  by  the  plaintiff.  The  question  is,  whether  the  evidence 
was  admissible  as  a  defence  to  the  action,  or,  in  other  words,  whether 
the  defendant  could  be  allowed  to  set  up  his  intoxication  to  avoid  the 
contract. 

This  question  has  been  already  substantially  decided  by  the  court  on 
the  present  circuit ;  but  the  importance  of  the  question,  and  the 
magnitude  of  the  demand  in  this  case,  have  led  us  to  give  it  further 
consideration.  According  to  Beverley's  Case,  4  Co.  123,  a  party  can- 
not set  up  intoxication  in  avoidance  of  his  contract  under  any  circum- 
stances.    Although  Lord  Coke  admits,  that  a  drunkard,  for  the  time 

«  For  discussion  of  principles,  see  (Murk  ou  CouLracts  (~d  Ed.).  §8  IL'-,  l^li. 
»  The  statement  of  facts  Is  omitted. 


156  CAPACITY    OF   PARTIES 

of  his  drunkenness,  is  non  compos  mentis.,  yet  he  says,  "his  drunken- 
ness shall  not  extenuate  his  act  or  offence,  but  doth  aggravate  his 
offence,  and  doth  not  derogate  from  his  act,  as  well  touching  his  life, 
lands,  and  goods,  as  any  thing  that  concerns  him."  He  makes  no  dis- 
tinction between  criminal  and  civil  cases,  nor  intimates  any  qualifica- 
tion of  his  doctrine,  on  the  ground  of  the  drunkenness  being  procured 
by  the  contrivance  of  another  who  would  profit  by  it.  His  doctrine  is 
general,  and  without  any  qualification  whatever;  and  connected 
with  it,  he  holds,  that  a  party  shall  not  be  allowed  to  stultify  him- 
self, or  disable  himself,  on  the  ground  of  idiocy  or  lunacy. 

The  latter  proposition  is  supported,  it  is  true,  by  two  or  three  cases 
in  the  year  books,  during  the  reigns  of  Edward  HI  and  Henry  VI ; 
by  Littleton,  s.  405,  who  lived  in  the  time  of  Hen.  VI ;  and  by  Stroud 
V.  Marshall,  Cro.  Eliz.  398,  and  Cross  v.  Andrews,  Cro.  Eliz.  622.  Sir 
William  Blackstone,  however,  who  traces  the  progress  of  this  notion, 
as  he  calls  it,  considers  it  contrary  to  reason,  and  shows  that  such  was 
not  the  ancient  common  law.  The  Register,  it  appears,  contains  a 
writ  for  the  alienor  himself,  to  recover  lands  aliened  by  him  during 
his  insanity;  and  Britton  states,  that  insanity  is  a  sufficient  plea  for  a 
man  to  avoid  his  own  bond.  Fitzherbert  also  contends,  "that  it  stands 
with  reason  that  a  man  should  show  how  he  was  visited  by  the  act  of 
God  with  infirmity,  by  which  he  lost  his  memory  and  discretion  for 
a  time."  Blacksfone  considers  the  rule  as  having  been  handed  down 
from  the  loose  cases  in  the  times  of  Edw.  Ill,  and  Hen.  VI,  founded 
upon  the  absurd  reasoning,  that  a  man  cannot  know,  in  his  sanity,  what 
he  did  when  he  was  non  compos  mentis,  and  he  says,  later  opinions, 
feeling  the  inconvenience  of  the  rule,  have,  in  many  points,  endeav- 
oured to  restrain  it.    2  Blac.  Com.  291. 

In  Thompson  v.  Leach,  3  Mod.  301,  it  was  held,  that  the  deed  of  a 
man  non  compos  mentis,  was  not  merely  voidable,  but  was  void  ab 
initio,  for  want  of  capacity  to  bind  himself  or  his  property.  In  Yates 
v.  Boen,  2  Stra.  1104,  the  defendant  pleaded  non  est  factum  to  debt 
on  article,  and  upon  the  trial,  offered  to  give  lunacy  in  evidence.  The 
chief  justice  at  first  thought  it  ought  not  to  be  admitted,  upon  the 
rule  in  Beverley's  Case,  that  a  man  shall  not  stultify  himself;  but 
on  the  authority  of  Smith  v.  Can,  in  1728,  where  Chief  Baron  Pen- 
gelley,  in  a  like  case  admitted  it ;  and  on  considering  the  case  of 
Thompson  v.  Leach,  the  chief  justice  suffered  it  to  be  given  in  evi- 
dence, and  the  plaintiff  became  nonsuit.  The  most  approved  elemen- 
tary writers  and  compilers  of  the  law  refer  to  this  case,  and  lay  it 
down  as  settled  law,  that  lunacy  may  be  given  in  evidence,  on  the  plea 
of  non  est  factum,  by  the  party  himself ;  and  it  is  said  to  have  been 
so  ruled  by  Lord  Mansfield,  in  Chamberlain  of  London  v.  Evans,  men- 
tioned in  note  to  1  Chit.  PI.  470. 

In  this  country,  it  has  been  decided  in  several  instances,  that  a  party 
may  take  advantage  of  his  own  disability,  and  avoid  his  contract,  by 


DRUNKEN    PERSONS  157 

showing  that  he  was  insane  and  incapable  of  contracting.  Rice  v. 
Peet,  15  Johns.  (N.  Y.)  503;  Webster  v.  Woodford,  3  Day  (Conn.) 
90.  These  decisions  are  founded  in  the  law  of  nature  and  of  justice, 
and  go  upon  the  plain  and  true  ground,  that  the  contract  of  a  party 
non  compos  mentis  is  absolutely  void,  and  not  binding  upon  him. 
The  rule  in  Beverley's  Case,  as  to  lunacy,  therefore,  is  not  only  op- 
posed to  the  ancient  common  law,  and  numerous  authorities  of  great 
weight,  but  to  the  principles  of  natural  right  and  justice,  and  cannot 
be  recognized  as  law;  and  it  is  appreh'ended,  that  the  case  is  as  little 
to  be  regarded,  as  authority  in  respect  to  intoxication,  which  rests 
essentially  upon  the  same  principle. 

It  is  laid  down  in  Buller's  N.  P.  172,  and  appears  to  have  been  de- 
cided by  Lord  Holt,  in  Cole  v.  Robins,  there  cited,  that  the  defend- 
ant may  give  in  evidence  under  the  plea  of  non  est  factum  to  a  bond, 
that  he  was  made  to  sign  it  when  he  was  so  drunk  that  he  did  not 
know  what  he  did.  And  in  Pitt  v.  Smith,  3  Campb.  Cas.  33,  where 
an  objection  was  made  to  an  attesting  witness  being  asked  whether 
the  defendant  was  not  in  a  complete  state  of  intoxication  when  he  ex- 
ecuted the  agreement,  Lord  EHenborough  says,  "you  have  alleged 
that  there  was  an  agreement  between  the  parties;  but  there  was  no 
agreement,  if  the  defendant  was  intoxicated  in  the  manner  supposed. 
He  had  not  an  agreeing  mind.  Intoxication  is  good  evidence  upon  a 
plea  of  non  est  factum  to 'a  deed,  of  non  consessit  to  a  grant,  and  of 
non  assumpsit  to  a  promise."  Chitty,  Selwyn,  and  Phillips  lay  down 
the  same  doctrine  and  Judge  Swift  in  his  digest  says,  that  an  agree- 
ment, signed  by  a  man  in  a  complete  state  of  intoxication,  is  void.  1 
Chit.  PI.  470;'  Selw.  N.  P.  563;    1  Phil.  Ev.  128;    1  Swift's  Dig.  173. 

In  these  various  authorities,  it  is  laid  down  generally,  and  without 
any  qualification,  that  drunkenness  is  a  defence,  and  no  intimation  is 
made  of  any  distinction,  founded  on  the  intoxication  being  procured 
by  the  party  claiming  the  benefit  of  the  contract.  It  is  true,  that  in 
Johnson  v.  Medlicott,  3  P.  Wms.  130,  that  circumstance  was  consid- 
ered essential  to  entitle  the  party  to  relief  in  equity  against  his  con- 
tract. Sir  Joseph  Jekyl  held,  that  the  having  been  in  drink  was  not 
any  reason  to  relieve  a  man  against  his  deed  or  agreement,  unless  the 
party  was  drawn  into  drink  by  the  management  or  contrivance  of  him 
who  gained  the  deed.  But  from  what  is  said  in  1  Fonb.  Eq.  68,  it 
would  not  seem  that  the  author  considered  this  circumstance  as  indis- 
pensable. He  says,  equity  will  relieve,  especially  if  the  drunkenness 
were  caused  by  the  fraud  or  contrivance  of  the  other  party,  and  he 
is  so  excessively  drunk,  that  he  is  utterly  deprived  of  the  use  of  his 
reason  or  understanding;  for  it  can  by  no  means  be  a  serious'  and  de- 
liberate consent;  and  without  this,  no  contract  can  be  binding  by  the 
law  of  nature.  In  Spiers  v.  Higgins,  decided  at  the  Rolls  in  1814, 
and  cited  in  1  Mad.  Ch.  304,  a  bill  filed  for  a  specific  performance 
of  an  agreement,  wiiich  was  cuLcrod  into  with  the  defendant   when 


158  CAPACITY    OF   PARTIES 

drunk,  was  dismissed  with  costs,  although  the  plaintiff  did  not  con- 
tribute to  make  the  defendant  drunk. 

On  principle,  it  would  seem  impossible  to  maintain,  that  a  contract 
entered  into  by  a  party  when  in  a  state  of  complete  intoxication,  and 
deprived  of  the  use  of  his  reason,  is  binding  upon  him,  whether  he 
was  drawn  into  that  situation  by  the  contrivance  of  the  other  party 
or  not.  It  is  an  elementary  principle  of  law,  that  it  is  of  the  essence 
of  every  contract,  that  the  party  to  be  bound  should  consent  to  what- 
ever is  stipulated,  otherwise  no  obligation  is  imposed  upon  him.  If 
he  has  not  the  command  of  his  reason,  he  has  not  the  power  to  give 
his  assent,  and  is  incapable  of  entering  into  a  contract  to  bind  him- 
self. Accordingly  Pothier  holds,  (vol.  1,  c.  1,  a.  4,  s.  1.)  that  ebriety, 
when  it  is  such  as  to  take  away  the  use  of  reason,  renders  the  person 
who  is  in  that  condition,  while  it  continues,  unable  to  contract,  since 
it  renders  him  incapable  of  assent.  And  it  seems  Heineccius  and  Puf- 
fendorf  both  consider  contracts  entered  into  under  such  circumstances, 
as  invalid.  By  the  Scotch  law,  also,  an  obligation  granted  by  a  person 
while  he  is  in  a  state  of  absolute  and  total  drunkenness,  is  ineffectual, 
because  the  grantor  is  incapable  of  consent;  but  a  lesser  degree  of 
drunkenness,  v/hich  only  darkens  reason,  is  not  sufficient.  Ersk.  Inst. 
447.  The  author  of  the  late  excellent  treatise  on  the  principles  and 
practice  of  the  court  of  chancery,  after  reviewing  the  various  cases 
in  equity  on  the  subject,  and  citing  the  Scotch  law  with  approbation, 
observes :  "The  distinction  thus  taken  seems  reasonable ;  for  it  never 
can  be  said  that  a  person  absolutely  drunk,  has  that  freedom  of  mind, 
generally  esteemed  necessary  to  a  deliberate  consent  to  a  contract ;  the 
reasoning  faculty  is  for  a  time  deposed.  At  law  it  has  been  held,  that 
upon  non  est  factum  the  defendant  may  give  in  evidence,  that  they 
made  him  sign  the  bond  when  he  was  so  drunk  that  he  did  not  know 
what  he  did.  So  a  will  made  by  a  drunken  man  is  invalid.  And  will 
a  court  of  equity  be  less  indulgent  to  human  frailty?  It  seems  to  be  a 
fraud  to  make. a  contract  with  a  man  who  is  so  drunk  as  to  be  incapa- 
ble of  deliberation."  1  Mad.  Ch.  302.  Mr.  Maddock  seems  to  con- 
sider it  as  settled,  that  at  law,  complete  intoxication  is  a  defence, 
and  that  it  ought  to  be  a  sufficient  ground  for  relief  in  equity;  and, 
indeed,  it  would  seem  difficult  to  come  to  a  different  conclusion. 

As  it  respects  crimes  and  torts,  sound  policy  forbids  that  intoxica- 
tion should  be  an  excuse ;  for  if  it  were,  under  actual  or  feigned  in- 
toxication, the  most  atrocious  crimes  and  injuries  might  be  committed 
with  impunity.  But  in  questions  of  mere  civil  concern,  arising  ex 
contractu,  and  affecting  the  rights  of  property  merely,  policy  does 
not  require  that  any  one  should  derive  an  unjust  profit  from  a  bargain 
made  with  a  person  in  a  state  of  intoxication,  although  brought  upon 
himself  by  his  own  fault,  or  that  he  should  be  a  prey  to  the  arts  and 
circumvention  of  others,  and  be  ruined,  or  even  embarrassed,  by  a 
bargain,  when  thus  deprived  of  his  reason.    It  is  a  violation  of  moral 


MARRIED   WOMEN  159 

duty,  to  take  advantage  of  a  man  in  that  defenceless  situation,  and 
draw  him  into  a  contract;  and  if  the  intoxication  is  such  as  to  de- 
prive him  of  the  use  of  his  reason,  it  cannot  be  very  material,  whether 
it  was  procured  by  the  other  party,  or  was  purely  voluntary.  The 
former  circumstance  would  only  stamp  the  transaction  with  deeper 
turpitude,  and  make  it  a  more  aggravated  fraud. 

The  evidence  which  was  offered  and  rejected  at  the  trial  in  the  case 
before  us,  went  not  only  to  show  that  the  defendant  was  so  intoxi- 
cated at  the  time  of  giving  the  note,  as  to  be  incapable  of  the  exercise 
of  his  understanding,  but  that  the  contract  was  grossly  unequal  and 
unreasonable;  and,  both  on  principle  and  authority,  we  think  the  ev- 
idence was  admissible,  and  that  a  new  trial  must  be  granted.  New 
trial  granted. 


IV.  Married  Women  • 


GREGORY  v.  PIERCE.  ♦ 

(Supreme    Judicial    Court    of    Massachusetts,    1842.      4    Mete.    478.) 

Assumpsit  on  a  promissory  note,  signed  by  the  defendant  in  the 
presence  of  an  attesting  witness,  dated  October  6th,  1825,  and  pay- 
able to  Putnam  &  Gregory,  partners,  of  whom  the  plaintiff  is  survivor. 

The  case  submitted  to  the  court  of  common  pleas,  on  an  agreed 
statement  of  facts,  as  follows :  "The  defendant  was  married  to  Varney 
Pierce,  Jr.,  in  1806,  who,  in  1816,  became  insolvent,  and  left  her  and 
went  out  of  the  commonwealth,  and  did  not  return  till  1818,  when  he 
came  back  and  remained  with  her  about  a  week.  He  then  left  her 
and  went  to  Ohio,  where  he  remained  till  his  death  in  1832.  He  made 
no  provision  for  the  support  of  his  wife  and  family,  after  he  left  her 
in  1816;  but  she  supported  herself  and  family,  after  he  left  her,  by 
her  own  labor,  contracting  debts  and  making  contracts  in  her  own 
name.  Putnam  &  Gregory  employed  her  to  db  work  for  them,  and 
supplied  her  with  necessaries  for  the  support  of  herself  and  family ; 
and  the  note  in  suit  was  given  for  the  balance  of  account  between  the 
parties." 

The  court  of  common  pleas  rendered  judgment  for  the  plaintiff,  and 
the  defendant  appealed  to  this  court. 

Shaw,  C.  J.  The  principle  is  now  to  be  considered  as  established 
in  this  state,  as  a  necessary  exception  to  the  rule  of  the  common  law, 
placing  a  married  woman  under  disability  to  contract  or  maintain  a 

«  For  (Uscussiou  of  principles,  see  Clark  ou  CoutracLs  (2ci  ICd.)  S  124. 


160  CAPACITY   OF   PARTIES 

suit,  that  where  the  husband  was  never  within  the  commonwealth,  or 
has  gone  beyond  its  jurisdiction,  has  wholly  renounced  his  marital 
rights  and  duties,  and  deserted  his  wife,  she  may  make  and  take  con- 
tracts, and  sue  and  be  sued  in  her  own  name,  as  a  feme  sole.  It  is  an 
application  of  an  old  rule  of  the  common  law,  which  took  away  the 
disability  of  coverture  when  the  husband  was  exiled  or  had  abjured  the 
realm.  Gregory  v.  Paul,  15  Mass.  31 ;  Abbot  v.  Bayley,  6  Pick.  89. 
In  the  latter  case,  it  was  held,  that  in  this  respect,  the  residence  of  the 
husband  in  another  state  of  these  United  States,  was  equivalent  to  a 
residence  in  any  foreign  state ;  he  being  equally  beyond  the  operation 
of  the  laws  of  the  commonwealth,  and  the  jurisdiction  of  its  courts. 

But,  to  accomplish  this  change  in  the  civil  relations  of  the  wife,  the 
desertion  by  the  husband,  must  be  absolute  and  complete ;  it  must  be 
a  voluntary  separation  from  and  abandonment  of  the  wife,  embracing 
both  the  fact  and  intent  of  the  husband  to  renounce  de  facto,  and  as 
far  as  he  can  do  it,  the  marital  relation,  and  leave  his  wife  to  act  as 
a  feme  sole.  Such  is  the  renunciation,  coupled  with  a  continued  ab- 
sence in  a  foreign  state  or  country,  which  is  held  to  operate  like  an 
abjuration  of  the  realm. 

In  the  present  case,  the  court  are  of  opinion,  that  the  circumstances 
stated  are  not  sufficient  to  enable  the  court  to  determine  whether  the 
husband  had  so  deserted  his  wife,  when  the  note  in  question  was  given. 
The  only  facts  stated  are,  that  he  was  insolvent  when  he  went  away; 
that  he  was  absent,  residing  seven  or  eight  years  in  Ohio ;  that  he  made 
no  provision  for  his  wife  and  her  family,  after  1816;  and  that  she 
supported  herself  and  them  by  her  own  labor.  But  it  does  not  appear 
that  he  was  of  ability  to  provide  for  her;  that  he  was  not  in  corre- 
spondence with  her ;  that  he  declared  any  intention  to  desert  her,  when 
he  left,  or  manifested  any  such  intention  afterwards ;  or  that  he  was 
not  necessarily  detained  by  sickness,  imprisonment  or  poverty. 

The  fact  of  desertion  by  a  husband  may  be  proved  by  a  great  variety 
of  circumstances  leading  with  more  or  less  probability  to  that  conclu- 
sion ;  as,  for  instance,  leaving  his  wife,  with  a  declared  intention  never 
to  return ;  marrying  another  woman  or  otherwise  living  in  adultery, 
abroad ;  absence  for  a  long  time,  not  being  necessarily  detained  by  his 
occupation  or  business,  or  otherwise  ;  making  no  provision  for  his  wife, 
or  wife  and  family,  being  of  ability  to  do  so ;  providing  no  dwelling  or 
home  for  her,  or  prohibiting  her  from  following  him ;  and  many  other 
circumstances  tending  to  prove  the  absolute  desertion  before  described. 
The  general  rule  being  that  a  married  woman  cannot  make  a  contract 
or  be  sued,  the  burden  of  proof  is  upon  the  plaintiff  to  show  that  she 
is  within  the  exception.  In  an  agreed  statement  of  facts,  such  fact 
of  desertion,  using  this  term  in  the  technical  sense  above  expressed,  as 
a  total  renunciation  of  the  marriage  relation,  must  be  agreed  to,  or 
such  other  facts  must  be  agreed  to,  as  to  render  the  conclusion  in- 
evitable.    If  the  facts  stated  are  all  that  can  be  proved  in  the  case, 


CORPORATIONS  161 

the  court  would  consider  that  the  plaintiff  had  not  sustained  the  bur- 
den of  proof,  and  therefore  could  not  have  judgment.  See  William- 
son V.  Dawes,  9  Bing.  292;  Stretton  v.  Bushnach,  4  Moore  &  S.  678, 
1  Bing.  139;  Bean  v.  Morgan,  4  McCord  (S.  C.)  148. 

But  apprehending  that  the  statement  may  have  been  agreed  to,  under 
a  misapprehension  of  the  legal  effect  of  the  facts  stated,  and  that  other 
evidence  may  exist,  the  court  are  of  opinion,  and  do  order,  that  the 
agreed  statement  of  facts  be  discharged,  and  a  trial  had  at  the  bar  of 
the  court  of  common  pleas. 


V.  Corporations* 


DOWNING  V.  MT.  WASHINGTON  ROAD  CO. 

(Supreme  Court  of  New  Hampshire,   1860.     40  N.    H.  230.) 

Assumpsit,  brought  by  Lewis  Downing  &  Sons,  to  recover  the  price 
of  eight  omnibuses,  andl  a  model  for  the  same,  one  light  wagon,  and 
one  baggage  wagon,  made  for  the  defendants,  under  a  contract  entered 
into  by  D.  O.  Macomber,  president  of  the  defendant  corporation  in 
their  behalf. 

The  light  wagon  was  made  and  sent  to  one  Cavis,  the  agent  for 
building  the  road,  and  was  used  by  him  in  making  it.  The  omnibuses 
and  baggage  wagon  were  intended  to  be  used  in  conveying  passengers 
up  and  down  the  mountain,  after  the  road  was  completed.  The  omni-. 
buses  were  constructed  in  a  peculiar  way,  and  are  not  fit  for  use  on 
ordinary  roads. 

By  their  act  of  incorporation,  passed  July  1,  1853,  the  corporation 
was  empowered  to  lay  out,  make,  and  keep  in  repair,  a  road  from 
such  point  in  the  vicinity  of  Mt.  Washington  as  they  may  deem  most 
favorable,  to  the  top  of  said  mountain,  etc.,  and  thence  to  some  point 
on  the  northwesterly  side  of  said  mountain,  etc.,  to  take  tolls  of  pas- 
sengers and  for  carriages,  to  build  and  own  toll-houses,  and  to  take 
land  for  their  road. 

The  corporation  was  duly  organized,  and  at  a  meeting  of  the  direc- 
tors on  the  31st  of  August,  1853,  before  said  contract  was  made,  it 
was  "voted  that  the  president  be  the  legal  agent  and  commissionei  of 
the  company;"    and  his  compensation  as  such  was  fixed. 

"The  president"  was  "directed  to  proceed  with  the  letting  of  the 
work  for  the  construction  of  the  road,     *     *     *     the  obtaining  the 

T  For  discussion  of  principles,  see  Clark  on  Contracts  ('2d  Kd.)  §§  llilJ-l'JT. 

TllHOCKM.CONT. — 11 


162  CAPACITY    OF   PARTIES 

right  of  way,"  and  "what  other  action  he  shall  deem  proper  for  the  in- 
terests of  the  company,"  etc. 

A  committee  was  appointed  "to  settle  in  relation  to  the  right  of  way, 
etc.,  and  in  relation  to  land  on  which  to  build  stables  and  other  build- 
ings, for  the  use  of  the  road,  and  also  for  building  all  such  stables  and 
houses  as  may  be  necessary  for  the  operations  of  the  company." 

It  appeared  that  by  an  additional  act,  passed  July  12,  1856,  the  cor- 
poration were  authorized  "to  erect  and  maintain,  lease  and  dispose  of 
any  building  or  buildings,  which  may  be  found  convenient  for  the  ac- 
commodation of  their  business,  and  of  the  horses  and  carriages  and 
travellers  passing  over  said  road." 

The  defendants  denied  the  authority  of  Macomber  to  make  such  a 
contract  in  behalf  of  the  corporation,  and  the  power  of  the  corporation 
under  its  charter  either  to  authorize  or  to  enter  into  such  a  contract. 

Bell,  C.  J.  Corporations  are  creatures  of  the  legislature,  having  no 
other  powers  than  such  as  are  given  to  them  by  their  charters,  or  such 
as  are  incidental,  or  necessary  to  carry  into  effect  the  purposes  for 
which  they  were  established.  Trustees  v.  Peaslee,  15  N.  H.  330; 
Perrine  v.  Chesapeake  Canal  Co.,  9  How.  172,  13  L.  Ed.  92.  In  giv- 
ing a  construction  to  the  powers  of  a  corporation,  the  language  of  the 
charter  should  in  general  neither  be  construed  strictly  nor  liberally, 
but  according  to  the  fair  and  natural  import  of  it,  with  reference  to 
the  purposes  and  objects  of  the  corporation.  Enfield  Bridge  v.  Hart- 
ford R.  R.,  17  Conn.  454,  44  Am.  Dec.  556;  Straus  v.  Eagle  Co.,  5 
Ohio  St.  59. 

If  the  powers  conferred  are  against  common  right,  and  trench  in  any 
way  upon  the  privileges  of  other  citizens,  they  are,  in  cases  of  doubt, 
to  be  construed  strictly,  but  not  so  as  to  impair  or  defeat  the  objects 
of  the  incorporation. 

In  the  present  case  the  power  to  take  the  lands  of  others,  and  to  take 
tolls  of  travellers,  must  be  strictly  construed,  if  doubts  should  arise 
on  those  points ;  but  it  is  not  seen  that  the  other  grants  to  the  defend- 
ant corporation  should  not  receive  a  fair  natural  construction. 

The  charter  of  the  Mt.  Washington  Road  empowers  them  to  lay 
out,  make  and  keep  in  repair,  a  road  from  Peabody  River  Valley  to 
the  top  of  Mount  Washington,  and  thence  to  some  point  on  the  north- 
west side  of  the  mountain.  It  grants  tolls  on  passengers  and  carriages, 
and  authorizes  them  to  take  lands  of  others  for  their  road,  and  to  build 
and  own  toll-houses,  and  erect  gates  and  appoint  toll-gatherers  to  col- 
lect their  tolls.  The  remaining  provisions  contain  the  ordinary  pow- 
ers of  corporations  relating  to  directors,  stock,  dividends,  meetings, 
etc.    Laws  1853,  c.  1486. 

This  chapter  confers  the  usual  powers  heretofore  granted  to  turnpike 
corporations,  and  no  others.  The  most  natural  and  satisfactory  mode 
of  ascertaining  what  are  the  powers  incidentally  granted  to  such  compa- 
nies, is  to  inquire  what  powers  have  been  usually  exercised  under  them, 


CORPORATIONS  1G3 

without  question  by  the  public  or  by  the  corporators.  It  may  be  safely 
assumed  that  the  powers  which  have  not  heretofore  been  found  neces- 
sary, and  have  not  been  claimed  or  exercised  under  such  charters,  are 
not  to  be  considered  generally  as  incidentally  granted.  Such  charters 
have  in  former  years  been  very  common  in  this  and  other  states,  and 
they  have  not,  so  far  as  we  are  aware,  been  understood  as  authorizing 
the  corporations  to  erect  hotels,  or  to  establish  stage  or  transportation 
lines,  to  purchase  horses  or  carriages,  or  to  employ  drivers  in  trans- 
porting passengers  or  freight  over  their  roads ;  and  no  such  powers 
have  anywhere  been  claimed  or  exercised  under  them.  We  are,  there- 
fore, of  opinion  that  the  power  to  establish  stage  and  transportation 
lines  to  and  from  the  mountain,  to  purchase  carriages  and  horses  for 
the  purpose  of  carrying  on  such  a  business,  was  not  incidentally 
granted  to  the  defendant  corporation  by  their  charter.  State  v.  Com- 
missioners of  Mansfield,  23  N.  J.  Law,  510,  57  Am.  Dec.  409. 

But  it  is  contended  that  the  power  to  make  this  contract  is  conferred 
by  the  act  in  amendment  of  the  charter,  passed  July  12,  1856.  By  this 
act  the  corporation  may  "erect  and  maintain,  lease  and  dispose  of  any 
building  or  buildings  which  may  be  found  convenient  for  the  accom- 
modation of  their  business,  and  of  the  horses  and  carriages  and  travel- 
lers passing  over  their  said  road."  By  their  business,  which  the  build- 
ings to  be  erected  were  designed  to  accommodate,  it  is  said  the  legis- 
lature must  have  intended  some  permanent  and  continuing  business 
beyond  that  of  merely  building  and  maintaining  a  road;  and  that  it 
could  be  no  other  than  that  of  erecting  a  hotel  on  the  mountain,  and  es- 
tablishing lines  of  carriages,  for  the  purpose  of  carrying  visitors  up 
and  down  the  mountain. 

But  the  foundation  of  this  implication  is  very  slight.  The  express 
grant  is  of  an  authority  to  erect,  etc.,  buildings,  not  of  all  kinds,  but 
such  as  may  be  found  convenient  for  the  accommodation  of  their  busi- 
ness, and  of  travellers,  etc.  The  business  here  referred  to  must  be  un- 
derstood to  be  such  as  they  are  by  their  charter  authorized  to  engage 
in.  If  nothing  had  been  said  of  horses  and  travellers,  there  could 
hardly  be  any  foundation  for  the  idea  that  a  hotel  could  have  been  con- 
templated by  the  legislature.  Buildings  suitable  for  the  accommodation 
of  their  toll-gatherers  and  workmen  employed  on  their  road,  would 
probably  be  thought  everything  the  legislature  intended  to  authorize  by 
this  additional  act.  Connected  as  this  authority  now  is  with  travellers, 
horses,  and  carriages,  there  is  scarce  a  pretence  for  argument  that  this 
additional  act  goes  any  further  than  the  original  act,  to  authorize  a 
stage  and  transportation  company.  It  is  not  unlikely  tliat  some  of  the 
projectors  of  this  enterprise  intended  to  secure  much  more  extensive 
rights  than  those  of  a  turnpike  and  hotel  company,  but  it  seems  certain 
they  have  not  exhibited  this  feature  of  their  case  to  the  legislature  so 
distinctly  as  to  secure  their  sanction,  and  the  charier  and  its  amend- 
ment as  yet  justifies  them  in  no  such  claim. 


164  CAPACITY   OF  PARTIES 

The  power  of  buying,  and  selling  real  and  personal  property  for  the 
legitimate  purposes  of  the  corporation,  and  the  power  of  contracting 
generally  for  the  same  purposes,  within  the  limits  prescribed  by  the 
charter,  being  granted,  we  understand  the  principle  to  be,  that  their 
purchases,  sales,  and  contracts  generally,  will  be  presumed  to  be  made 
within  the  legitimate  scope  and  purpose  of  the  corporation,  until  the 
contrary  appears,  and  that  the  burden  of  showing  that  any  contract  of 
a  corporation  is  beyond  its  legitimate  powers,  rests  on  the  party  who 
objects  to  it.  Indiana  v.  Woram,  6  HilUN.  Y.)  37,  40  Am.  Dec.  378; 
Ex  parte  Peru  Iron  Co.,  7  Cow.  (N.  Y.)  540 ;  Farmers'  Loan  8l  Trust 
Co.  V.  Clowes,  3  N.  Y.  470;  Farmers'  Loan  &  Trust  Co.  v.  Curties, 
7  N.  Y.  466 ;  Beers  v.  Phosnix  Glass  Co.,  14  Barb  (N.  Y.)  358. 

If  a  corporation  attempt  to  enforce  a  contract  made  with  them  in  a 
case  beyond  the  legitimate  limits  of  their  corporate  power,  that  fact, 
being  shown,  will  ordinarily  constitute  a  perfect  defence.  Green  v. 
Seymour,  3  Sandf.  Ch.  (N.  Y.)  285  ;  Bangor  Boom  v.  Whiting,  29  Me. 
123 ;  Life  &  Fire  Ins.  Co.  v.  Mechanic  Fire  Ins.  Co.,  7  Wend.  (N.  Y.) 
31 ;  New  York,  etc.,  Ins.  Co.  v.  Ely,  5  Conn.  560,  13  Am.  Dec.  100. 

And  if  a  suit  is  brought  upon  a  contract  alleged  to  be  made  by  the 
corporation,  but  which  is  shown  to  be  beyond  its  corporate  power  to 
enter  into,  the  contract  will  be  regarded  as  void,  and  the  corporation 
may  avail  themselves  of  that  defence.  Beach  v.  Fulton  Bank,  3  Wend. 
(N.  Y.)  573 ;  Albert  v.  Savings  Bank,  1  Md.  Ch.  407 ;  Abbott  v.  Bal- 
timore, etc.,  Co.,  1  Md.  Ch.  542 ;  Straus  v.  Eagle  Ins.  Co.,  5  Ohio  St. 
59;  Bacon  v.  Mississippi  Ins.  Co.,  31  Miss.  116;  Bank  of  Genesee  v. 
Patchin  Bank,  13  N.  Y.  315;   Gage  v.  Newmarket,  18  Q.  B.  457. 

The  contract  set  up  in  this  case,  was  made  not  by  the  corporation 
itself,  by  a  vote,  nor  by  an  agent  expressly  authorized  to  sign  a  con- 
tract already  drawn,  but  it  was  made  by  the  president  of  the  corpora- 
tion, acting  under  an  appointment  as  their  general  agent ;  and  it  is 
argued  that  he  was  fully  authorized  by  votes  of  the  corporation  to 
bind  them  by  such  a  contract  as  the  present;  but  it  is  not  necessary 
to  consider  this  question,  as  we  think  it  settled  that  the  powers  of  the 
agents  of  corporations  to  enter  into  contracts  in  their  benalf  are  lim- 
ited, by  the  nature  of  things,  to  such  contracts  as  the  corporations  are 
by  their  charters  authorized  to  make.  This  principle  is  distinctly  recog- 
nized in  AlcCullough  v.  Moss,  5  Denio  (N.  Y.)  567,  overruling  the  case 
of  Moss  V.  Rossie  Lead  Co.,  5  Hill  (N.  Y.)  137,  and  in  Central  Bank 
v.  Empire  Stone-Dressing  Co.,  26  Barb.  (N.  Y.)  23 ;  Bank  of  Genesee 
V.  Patchin  Bank,  13  N.  Y.  315. 

The  same  want  of  power  to  give  authority  to  an  agent  to  contract, 
and  thereby  bind  the  corporation  in  matters  beyond  the  scope  of  their 
corporate  objects,  must  be  equally  conclusive  against  any  attempt  to 
ratify  such  contract.  What  they  cannot  do  directly  they  cannot  do 
indirectly.  They  cannot  bind  themselves  by  the  ratification  of  a  con- 
tract which  they  had  no  authority  to  make.    5  Denio  (N.  Y.)  567,  above 


CORPORATIONS 


165 


cited.  The  power  of  the  agent  must  be  restricted  to  the  business 
which  the  company  was  authorized  to  do.  Within  the  scope  of  the 
business  which  they  had  power  to  transact,  he,  as  its  agent,  may  be 
authorized  to  act  for  it,  but  beyond  that  he  could  not  be  authorized, 
for  its  powers  extend  no  further. 

This  view  seems  to  us  entirely  conclusive  against  the  claim  made 
for  the  omnibuses  and  model,  and  probably  for  the  baggage  wagon. 

As  to  the  light  wagon,  that  may  stand  on  a  different  ground.  Such 
a  wagon  might  be  useful  and  necessary  for  the  use  of  the  agent  of 
the  company,  in  conducting  the  undoubted  business  of  the  corporation, 
— the  building  and  maintaining  the  road. 

We  are  unable  to  assent  to  the  position  taken  jn  the  argument,  that 
a  ratification  of  part  is  a  ratification  of  the  whole  contract.  While  the 
corporation  may  be  restricted  from  ratifying  a  contract  beyond  the 
scope  of  the  objects  of  the  corporation,  there  could  be  no  such  objec- 
tion as  to  any  matter  clearly  within  their  power.  The  other  contracting 
party  might  have  a  right  to  reject  such  ratification,  claiming  that  the 
contract  is  entire,  and  if  not  ratified  as  such,  it  should  not  be  made  good 
for  a  part  only.  But  if  they  claim  the  benefit  of  the  partial  ratifica- 
tion, the  corporation  can  hardly  object.. 


166  BEAUTY   OF   CONSENT 


REALITY  OF  CONSENT 


I.  Mistake  * 


1.  Mistake  as  to  the  Nature  of  the  Til^nsactign — Written 

Instrument 


FOSTER  V.  MACKINNON. 
(Court  of  Common  Pleas,  1SG9.     L.  R,  4  C.  P.  704.) 

ByleS,  J.^  This  was  an  action  by  the  plaintiff  as  indorsee  of  a  bill 
of  exchange  for  £3,000  against  the  defendant,  as  indorser.  The  de- 
fendant by  one  of  his  pleas  traversed  the  indorsement,  and  by  another 
alleged  that  the  defendant's  indorsement  was  obtained  from  him  by 
fraud.  The  plaintiff  was  a  holder  for  value  before  maturity,  and 
without  notice  of  any  fraud. 

There  was  contradictory  evidence  as  to  whether  the  indorsement 
was  the  defendant's  signature  at  all ;  but,  according  to  the  evidence 
of  one  Callow,  the  acceptor  of  the  bill,  who  was  called  as  a  witness 
for  the  plaintiff,  he,  Callow,  produced  the  billto  the  defendant,  a 
gentleman  advanced  in  life,  fo^  him  to  put  his  signature  on  the_back^ 
after  that  of  one  Cooper,  who  was  payee  of  the  Lill  and  first  indorser, 
Callow  not  saying  that  it  was  a  bill,  and  telling  the  defendant._tiiat- 
the  instrument  was  a  guarantee.  The  defendant  did  not  see  the  face 
of  the  bill  at  all.  But  the  bill  was  of  the  usual  shape,  and  bore  a_ 
stamp,  the  impress  of  which'stamp  was  visible^at  the  back  of  the  bill. 
The  defendant  signed  his  name  after  Cooper's^  he,  the  defendant  (as 
the  witness  stated),  believing  the  document  to  be  a  guarantee  only. 

The  lord  chief  justice  told  the  jury  that,  if  the  indorsement  was  not 
the  defendant's  signature,  or  if,  being  his  signature,  it  was  obtained 
upon  a  fraudulent  representation  that  it  was  a  guarantee,  and  the  de- 
fendant signed  it  without  knowing  that  it  was  a  bill,  and  under  the 
belief  that  it  was  a  guarantee,  and  if  the  defendant  was  not  guilty 
of  any  negligence  in  so  signing  the  paper,  the  defendant  was  entitled 
to  the  verdict.    The  jury  found  for  the  defendant. 

A  rule  nisi  was  obtained  for  a  new  trial,  first,  on  the  ground  of 
misdirection  in  the  latter  part  of  the  summing-up,  and,  secondly,  on 
the  ground  that  the  verdict  was  against  the  evidence. 

As  to  the  first  branch  of  the  rule,  it  seems  to  us  that  the  question 

1  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  130-134. 
»  The  statement  of  facts  is  omitted. 


MISTAKE  1G7 

arises  on  the  traverse  of  the  indorsement.  The  case  presented  by 
the  defendant  is  that  he  never  made  the  contract  declared  on ;  that  he 
never  saw  the  face  of  the  bill ;  that  the  purport  of  the  contract  was 
fraudulently  misdescribed  to  him;  that,  when  he  signed  one  thing,  he 
was  told  and  believed  that  he  was  signing  another  and  an  entirely  dif- 
ferent thing ;   and  that  his  mind  never  went  with  his  act. 

It  seems  plain,  on  principle  and  on  authority,  that,  if  a  blind  man, 
or  a  man  who  cannot  read,  or  who  for  some  reason  (not  implying  neg- 
ligence) forbears  to  read,  has  a  written  contract  falsely  read  over  to 
him,  the  reader  misreading  to  such  a  degree  that  the  written  contract 
is  of  a  nature  altogether  different  from  the  contract  pretended  to  be 
read  from  the  paper  which  the  blind  or  illiterate  man  afterwards 
signs;  then,  at  least  if  there  be  no  negligence,  the  signature  so  ob- 
tained is  of  no  force.  And  it  is  invalid  not  merely  on  the  ground  of 
fraud,  where  fraud  exists,  but  on  the  ground  that  the  mind  of  the 
signer  did  not  accompany  the  signature;  in  other  words,  that  he  nev- 
er intended  to  sign,  and  therefore,  in  contemplation  of  law,  never  did 
sign,  the  contract  to  which  Kis  name  is  appended. 

The  authorities  appear  to  us  to  support  this  view  of  the  law.  In 
Thoroughgood's  Case,  2  Coke,  9b,  it  was  held  that,  if  an  illiterate  man 
have  a  deed  falsely  read  over  to  him,  and  he  then  seals  and  delivers 
the  parchment,  that  parchment  is  nevertheless  not  his  deed.  In  a  note 
to  Thoroughgood's  Case,  2  Coke,  9b,  in  Fraser's  edition  of  Coke's 
Reports,  it  is  suggested  that  the  doctrine  is  not  confined  to  the  condi- 
tion of  an  illiterate  grantor;  and  a  case  in  Keilwey's  Reports  (70  pi. 
6),  is  cited  in  support  of  this  observation.  On  reference  to  that  case, 
it  appears  that  one  of  the  judges  did  there  observe  that  it  made  no 
difference  whether  the  grantor  were  lettered  or  unlettered.  That, 
however,  was  a  case  where  the  grantee  himself  was  the  defrauding 
party.  Bu^the  position  that  if  a  grantor  or  covenantor  be  deceived 
or  misled  as  to  the  actual  contents  of  the  deed,  the  deed  does  not  bind 
him,  is  supported  by  many  authorities.  See  Com.  Dig.  "Fait"  (B,  2)  ; 
and  is  recognized  by  Bayley,  B.,  and  the  court  of  exchequer,  in  the 
case  of  Edwards  v.  Brown,  1  Cromp.  &  J.  312.  Accordingly,  it  has 
recently  been  decided  in  the  exchequer  chamber  that  if  a  deed  be 
delivered,  and  a  blank  left  therein  be  afterwards  improperly  filled  up 
(at  least,  if  that  be  done  without  the  grantor's  negligence),  it  is  not 
the  deed  of  the  grantor.  Swan  v.  North  British  Australasian  Land 
Co.,  2  Hurl  &C.  175. 

These  cases  apply  to  deeds,  but  the  principle  is  equally  applicable 
to  other  written  contracts.  Nevertheless,  this  principle,  when  applied 
to  negotiable  instruments,  must  be  and  is  limited  in  its  application. 
These  instruments  are  not  only  assignable,  but  they  form  part  of  the 
currency  of  the  country.  A  qualification  of  the  general  rule  is  neces- 
sary to  protect  innocent  transferees  for  value.  If,  therefore,  a  man 
writes  his  name  across  the  back  of  a  blank  bill-stamp,,  and  part  with 


168  REALITY  OF   CONSENT 

it,  and  the  paper  is  afterwards  improperly  filled  up,  he  is  liable  as 
irdorser.  If  he  write  it  across  the  face  of  the  bill,  he  is  liable  as  ac- 
ceptor, when  the  instrument  has  once  passed  into  the  hands  of  art  in- 
nocent indorsee  for  value  before  maturity,  and  liable  to  the  extent  of 
any  sum  which  the  stamp  will  cover. 

Ill  these  cases,  however,  the  party  signing  knows  what  he  is  doing. 
The  indorser  intended  to  indorse,  and  the  acceptor  intended  to  accept, 
a  bin  of  exchange  to  be  thereafter  filled  up,  leaving  the  amount,  the 
date,  the  maturity,  and  the  other  parties  to  the  bill  undetermined. 

But  in  the  case  now  under  consideration  the  defendant,  according 
to  the  evidence,  if  believed,  and  the  finding  of  the  jury,  never  in- 
tended to  indorse  a  bill  of  exchange  at  all,  but  intended  to  sign 
a  contract  of  an  entirely  different  nature.  It  was  not  his  design, 
andj  if  he  were  guilty  of  no  negligence,  it  was  not  even  his  fault 
that  the  instrument  he  signed  turned  out  to  be  a  bill  of  exchange.  It 
was  as  if  he  had  written  his  name  on  a  sheet  of  paper  for  the  pur- 
pose of  franking  a  letter,  or  in  a  lady's  album,  or  on  an  order  for  ad- 
mission to  the  Temple  church,  or  on  the  fly-leaf  of  a  book,  and  there 
had  already  been,  without  his  knowledge,  a  bill  of  exchange  or  a  prom- 
issory note  payable  to  order  inscribed  on  the  other  side  of  the  paper. 
To  make  the  case  clearer,  suppose  the  bill  or  note  on  the  other  side  of 
the  paper  in  each  of  these  cases  to  be  written  at  a  time  subsequent  to 
the  signature,  then  the  fraudulent  misapplication  of  that  signature  to 
a  different  purpose  would  have  been  a  counterfeit  alteration  of  a  writ- 
ing with  intent  to  defraud,  and  would  therefore  have  amounted  to  a 
forgery.  In  that  case  the  signer  would  not  have  been  bound  by  his 
signature,  for  two  reasons :  First,  that  he  never  in  fact  signed  the 
writing  declared  on;  and,  secondly,  that  he  never  intended  to  sign 
any  such  contract. 

In  the  present  case  the  first  reason  does  not  apply,  but  the  second 
reason  does  apply.  The  defendant  never  intended  to  sign  that  con- 
tract, or  any  such  contract.  He  never  intended  to  put  his  name  to  any 
instrument  that  then  was  or  thereafter  might  become  negotiable.  He 
was  deceived,  not  merely  as  to  the  legal  effect,  but  as  to  the  actual  con- 
tents of  the  instrument. 

We  are  not  aware  of  any  case  in  which  the  precise  question  now  be- 
fore us  has  arisen  on  bills  of  exchange  or  promissory  notes,  or  been 
judicially  discussed.  In  the  case  of  Ingham  v.  Primrose,  7  C.  B.  (N. 
S.)  83;  28  L.  J.  (C.  P.)  294,  and  in  the  case  of  Nance  v.  Lary,  5 
Ala.  370,  cited  1  Pars.  Bills,  114,  note,— both  cited  by  the  plaintiff, 
— the  facts  were  very  dift'erent  from  those  of  the  case  before  us,  and 
have  but  a  remote  bearing  on  the  question.  But  in  Putnam  v.  Sulli- 
van, an  American  case,  reported  in  4  Mass.  45,  3  Am.  Dec.  206,  and 
cited  in  1  Pars.  Bills,  p.  Ill,  note,  a  distinction  is  taken  by  Chief  Jus- 
tice Parsons  between  a  case  where  an  indorser  intended  to  indorse 
such  a  note  as  he  actually  indorsed,  being  induced  by  fraud  to  indorse 


MISTAKE  169 

it,  and  a  case  where  he  intended  to  indorse  a  different  note,  and  for  a 
different  purpose.  And  the  court  intimated  an  opinion  that,  even  in 
such  a  case  as  that,  a  distinction  might  prevail,  and  protect  the  in- 
dorsee. 

The  distinction  in  the  case  now  under  consideration  is  a  much 
plainer  one,  for  on  this  branch  of  the  rule  we  are  to  assume  that  the 
indorser  never  intended  to  indorse  at  all,  but  to  sign  a  contract  of  an 
entirely  different  nature. 

For  these  reasons  we  think  the  direction  of  the  lord  chief  justice 
was  right. 

With  respect,  however,  to  the  second  branch  of  the  rule,  we  are  of 
opinion  that  the  case  should  undergo  further  investigation.  We  ab- 
stain from  giving  our  reasons  for  this  part  of  our  decision  only  lest 
they  should  prejudice  either  party  on  a  second  inquiry. 

The  rule,  therefore,  will  be  made  absolute  for  a  new  trial.  Rule 
absolute. 


2.  Mistake  as  to  the  Pt=:rson  with  Whom  the  Contract  is  Made 


^  CUNDY  et  al.  v.  LINDSAY  et  al. 

(House  of  Lords,  1878.     3  App.   Cas.  459.) 

Appeal  from  court  of  appeal. 

In  1873,  one  Alfred  Blenkarn  hired  a  room  at  a  corner  house  in 
Wood  streetTCheapside.  It  had  two  side  windows  opening  into  Wood 
street;  but,  though  the  entrance  was  from  Little  Love  Lane,  i^:  was 
by  him  constantly  described  as  37  Wood  street,  Cheapside.  His  agree- 
ment for  this  room  was  signed  "Alfred  Blenkarn."  The  now„i:£spond- 
ents,  Messrs.  Lindsay  &  Co.,  were  linen  manufacturers,  carrying  on 
business  at  Belfast.  In  thejattexpart  of  1873,  Blenkarn  wrote  to  the 
plaintiffs  on  the  subject  of  a  purchase  from  them  of  goods  of  their 
manufacture— chiefly  cambric  handkerchiefs.  His  letters  were  written, 
as  from  "37  Wood  street,  Cheapside,"  where  he  pretended  to  have  a 
warehouse,  but  in  fact  occupied  only  a  room  on  the  top  floor,  and  that 
room,  though  looking  into  Wood  street  on  one  side,  could  only  be 
reached  from  the  entrance  in  5  Little  Love  Lane.  The  name  signed  to 
these  letters  was  always  signed  witiiout  any  initial  as  representing  a 
Christian  name,  and  was,  besides,  so  written  as  to  appear  "Bkiikiron 

&  Co." 

There  was  a  highly  respectable  firm  of  W.  Blenkiron  &  Son,  carry- 
ing on  business  in  Wood  street,  but  at  numl)er  123  Wood  street,  and 
not  at  37.    Messrs.  Lindsay,  who  knew  the  respectability  of  Blenkiron 


170  REALITY   OF   CONSENT 

&  Son,  though  not  the  number  of  the  house  where  they  carried  en 
business,  answered  the  letters,  and  sent  the  goods  addressed  tc 
"Messrs.  Blenkiron  &  Co.,  37  Wood  Street,  Cheapside,"  where  they 
were  taken  in  at  once.  The  invoices  sent  with  the  goods  were  always 
addressed  in  the  same  way.  Blenkarn  sold  the  goods  thus  fraudulent- 
ly obtained  from  Messrs.  Lindsay  to  different  persons,  and  among  the 
rest  he  sold  250  dozen  of  cambric  handkerchiefs  to  the  Messrs.  Cun- 
dy,  who  were  bona  fide  purchasers,  and  who  resold  them  in  the  or- 
dinary way  of  their  trade.  Payment  not  being  made,  an  action  was 
commenced  in  the  mayor's  court  of  London  by  Messrs.  Lindsay,  the 
junior  partner  of  which  firm,  Mr.  Thompson,  made  the  ordinary  affi- 
davit of  debt,  as  against  Alfred  Blenkarn,  and  therein  named  Alfred 
Blenkarn  as  the  debtor. 

Blenkarn's  fraud  was  soon  discovered,  and  he  was  prosecuted  at  the 
Central  criminal  court,  and  convicted  and  sentenced.  Messrs.  Lind- 
say then  brought  an  action  against  Messrs.  Cundy  as  for  unlawful 
conversion  of  the  handkerchiefs.  The  cause  was  tried  before  Mr. 
Justice  Blackburn,  who  left  it  to  the  jury  to  consider  whether  Al- 
fred Blenkarn,  with  a  fraudulent  intent  to  induce  the  plaintiffs  to 
give  him  the  credit  belonging  to  the  good  character  of  Blenkiron  & 
Co.,  wrote  the  letters,  and  by  fraud  induced  the  plaintiffs  to  send  the 
goods  to  37  Wood  street— were  they  the  same  goods  as  those  bought 
by  the  defendants— and  did  the  plaintiffs  by  the  affidavit  of  debt  in- 
tend, as  a  matter  of  fact,  to  adopt  Alfred  Blenkarn  as  their  debtor. 

The  first  and  second  questions  were  answered  in  the  affirmative, 
and  the  third  in  the  negative.  A  verdict  was  taken  for  the  defendants, 
with  leave  reserved  to  move  to  enter  the  verdict  for  the  plaintiff's.  On 
motion  accordingly,  the  court,  after  argument,  ordered  the  rule  for 
entering  judgment  for  the  plaintiffs  to  be  discharged,  and  directed 
judgment  to  be  entered  for  the  defendants.  1  Q.  B.  Div.  348.  On 
appeal  this  decision  was  reversed,  and  judgment  ordered  to  be  entered 
for  the  plaintiffs,  Messrs.  Lindsay.  2  Q.  B.  Div.  96.  This  appeal  was 
then  brought. 

Cairns,  L.  Ch.»  My  lords,  you  have  in  this  case  to  discharge  a 
duty  which  is  always  a  disagreeable  one  for  any  court,  namely,  to  de- 
termine as  between  two  parties,  both  of  whom  are  perfectly  innocent, 
upon  which  of  the  two  the  consequences  of  a  fraud  practised  upon 
both  of  them  must  fall.  My  lords,  in  discharging  that  duty  your  lord- 
ships can  do  no  more  than  apply  rigorously  the  settled  and  well-known 
rules  of  law.  Now,  with  regard  to  the  title  to  personal  property,  the 
settled  and  well-known  rules  of  law  may,  I  take  it,  be  thus  expressed : 

By  the  law  of  our  country  the  purchaser  of  a  chattel  takes  the  chat- 
tel, as  a  general  rule,  subject  to  what  may  turn  out  to  be  certain  in- 
firmities in  the  title.    If  he  purchases  the  chattel  in  market  overt,  he 

8  Concurring  opinions  by  Lord  Hatlierley  and  Lord  Penzance  are  omitted. 


MISTAKE  171 

obtains  a  title  which  is  good  against  all  the  world ;  but  if  he  does  not 
purchase  the  chattel  in  market  overt,  and  if  it  turns  out  that  the  chattel 
has  been  found  by  the  person  who  professed  to  sell  it,  the  purchaser 
will  not  obtain  a  title  good  as  against  the  real  owner.  If  it  turns  out 
that  the  chattel  has  been  stolen  by  the  person  who  has  professed  to  sell 
it,  the  purchaser  will  not  obtain  a  title:  If  it  turns  out  that  the  chattel 
has  come  into  the  hands  of  the  person  who  professed  to  sell  it,  by  a  de 
factocontract,  that  is  to  say,  a  contract  ^vhich  has  purported  to  pass 
tHe  property  to  him  from  the  owner  of  the  property,  there  the  purchas- 
er will  obtain  a  good  title,  even  although  afterwards  it  should  appear 
that  there  were  circumstances  connected  with  that  contract  which 
would  enable  the  original  owner  of  the  goods  to  reduce  it,  and  to  set  it 
aside,  because  these  circumstances  so  enabling  the  original  owner  of 
the  goods  or  of  the  chattel  to  reduce  the  contract  and  to  set  it  aside, 
will  not  be  allowed  to  interfere  with  a  title  for  valuable  consideration 
obtained  by  some  third  party  during  the  interval  while  the  contract  re- 
mained unreduced. 

My  lords,  the  question,  therefore,  in  the  present  case,  as  your  lord- 
ships will  observe,  really  becomes  the  very  short  and  simple  one  which 
I  am  about  to  state.  Was  there  any  contract  which,  with  regard  to 
the  goods  in  question  in  this  case,  had  passed  the  property  in  the 
goods  from  the  Messrs.  Lindsay  to  Alfred  Blenkarn?  If  there  was 
any  contract  passing  that  property,  even  although,  as  I  have  said,  that 
contract  might  afterwards  be  open  to  a  process  of  reduction,  upon  the 
ground  of  fraud,  still,  in  the  meantime,  Blenkarn  might  have  con- 
veyed a  good  title  for  valuable  consideration  to  the  present  appellants. 

Now,  my  lords,  there  are  two  observations  bearing  upon  the.  solu- 
tion of  that  question  which  I  desire  to  make.  In  the  first  place,  if 
the  property  in  the  goods  in  question  passed,  it  could  only  pass  by  way 
of  contract.  There  is  nothing  else  which  could  have  passed  the  proper- 
ty. The  second  observation  is  this :  Your  lordships  are  not  here  em- 
barrassed by  any  conflict  of  evidence,  or  any  evidence  whatever  as  to 
conversations  or  as  to  acts  done;  the  whole  history  of  the  whole 
transaction  lies  upon  paper.  The  principal  parties  concerned,  the  re- 
spondents and  Blenkarn,  never  came  in  contact  personally;  every- 
thing that  was  done  was  done  by  writing.  What  has  to  be  judged  of, 
and  wiiat  the  jury  in  the  present  case  had  to  judge  of  was  merely  the 
conclusion  to  be  derived  from  that  writing,  as  applied  to  the  admitted 
facts  of  the  case. 

Now,  my  lords,  discharging  that  duty  and  answering  that  inquiry, 
what  the  jurors  have  found  is,  in  substance,  this:  It  is  not  necessary 
to  spell  out  the  words,  because  the  substance  of  it  is  beyond  all  doubt 
They  have  found  that  by  the  form  of  the  signatures  to  the  letters 
which  were  written  by  Blenkarn,  by  the  mode  in  which  his  letters  and 
his  ajjplications  to  the  respondents  were  made  out,  and  by  the  way  in 
which  he  left  uncorrected  the  mode  and  form  in  which,  in  turn,  he  was 


172  EEALITY   OF   CONSENT 

addressed  by  the  respondents;  that  by  all  those  means  he  led,  and 
intended  to  lead,  the  respondents  to  believe,  and  they  did  believe,  that 
the  person  with  whom  they  were  communicating  was  not  Blcnkarn, 
the  dishonest  and  irresponsible  man,  but  was  a  well  known  and  solvent 
house  of  Blenkiron  &  Co.,  doing  business  in  the  same  street.  My 
lords,  those  things  are  found  as  matters  of  fact,  and  they  are  placed 
beyond  the  range  of  dispute  and  controversy  in  the  case. 

■If  that  is  so,  what  is  the  consequence?     It  is  that  Blenkarn — the 
dishonest  man,  as  I  call  him — was  acting  here  just  in  the  same  way 
as  if  he  had  forged  the  signature  of  Blenkiron  &  Co.,  the  respectable 
firm,  to  the  applications  for  goods,  and  as  if  when,  in  return,  the  goods 
were  forwarded  and  letters  were  sent,   accompanying  them,  he  had 
^C''*' ^^intercepted  the  goods  and  intercepted  the  letters,  and  had  taken  pos- 
^  *•      session  of  the  goods,  and  of  the  letters  which  were  addressed  to  and 
intended  for,  not  himself,  but  the  firm  of  Blenkiron  &  Co.    Now,  my 
lords,  stating  the  matter  shortly  in  that  way,  I  ask  the  question,  how 
•  is  it  possible  to  imagine  that  in  that  state  of  things  any  contract  could 
have  arisen  between  the  respondents  and  Blenkarn,  the  dishonest  man  ? 
Of  him  they  knew  nothing,  and  of  him  they  never  thought.     With 
him  they  never  intended  to  deal.    Their  minds  never,  even  for  an  in- 
stant of  time  rested'  upon  him,  and  as  between  him  and  them  there 
was  no  consensus  of  mind  which  could  lead  to  any  agreement  or  any 
contract  whatever.     As  between  him  and  them  there  was  merely  the 
one  side  to  a  contract,  where,  in  order  to  produce  a  contract,  two  sides 
.      would  be  required.    With  the  firm  of  Blenkiron  &  Co.  of  course  there 
was  no  contract,  for  as  to  them  the  matter  was  entirely  unknown, 
and  therefore  the  pretence  of  a  contract  was  a  failure. 

The  result,  therefore,  my  lords,  is  this:  that  your  lordships  have 
not  here  to  deal  with  one  of  those  cases  in  which  there  is  de  facto  a 
contract  made  which  may  afterwards  be  impeached  and  set  aside  on 
the  ground  of  fraud;  but  you  have  to  deal  with  a  case- which  ranges 
itself  under  a  completely  different  chapter  of  law,  the  case,  namely,  in 
which  the  contract  never  comes  into  existence.  My  lords,  that  being 
so,  it  is  idle  to  talk  of  the  property  passing.  The  property  remained, 
as  it  originally  had  been,  the  property  of  the  respondents,  and  the  title 
which  was  attempted  to  be  given  to  the  appellants  was  a  title  which 
could  not  be  given  to  them. 

My  lords,  I  therefore  move  your  lordships  that  this  appeal  be  dis- 
missed with  costs,  and  the  judgment  of  the  court  of  appeal  affirmed. 
Judgment  appealed  from  affirmed,  and  appeal  dismissed,  with  costs. 


MISTAKE  173 

3.  Mistake  as  to  Nature  o^  Subject-Matter  of  Contract 
(A)  Mistake  as  to  Existence  of  Subject-Matter 


COUTURIER  et  al.  v.  HASTIE  et  al. 
(House  of  Lords,  1856.     5  H.  L.  Cas.  673.) 

The  plaintiffs  were  merchants  at  Smyrna ;  the  defendants  were  corn 
factors  in  London ;  and  this  action  was  brought  to  recover  from  them 
the  price  of  a  cargo  of  Indian  corn,  which  had  been  shipped  at  Sat- 
onica,  on  board  a  vessel  chartered  by  the  plaintiffs  for  a  voyage  to 
England,  and  had  been  sold  in  London  by  the  defendants  in  error, 
upon  a  del  credere  commission.  The  purchaser,  under  the  circumstanc- 
es hereafter  stated,  had  repudiated  the  contract. 

In  January,  1848,  the  plaintiffs  chartered  a  vessel  at  Salonica,  to 
bring  a  cargo  of  1180  quarters  of  corn  to  England.  On  the  8th  of 
February  a  policy  of  insurance  was  effected  on  "corn,  warranted  free 
from  average,  unless  general,  or  the  ship  be  stranded."  On  the  22d 
of  that  month,  the  master  signed  a  bill  of  lading,  making  the  corn  de- 
liverable to  the  plaintiffs,  or  their  assigns,  "he  or  they  paying  freight, 
as  per  charter-party,  with  primage  and  average  accustomed."  On  the 
23d  February  the  ship  sailed  on  the  homeward  voyage.  On  the  1st 
May,  1848,  Messrs.  Bernouilli,  the  London  agents  of  the  plaintiff's, 
and  the  persons  to  whom  the  bill  of  lading  had  been  indorsed,  employed 
the  defendants  to  sell  the  cargo,  and  sent  them  the  bill  of  lading,  the 
charter-party,  and  the  policy  of  insurance,  asking  and  receiving  there- 
on an  advance  of  i600. 

On  the  15th  May  the  defendants  sold  the  cargo  to  A.  B.  Callander, 
who  signed  a  bought  note,  in  the  following  terms :  "Bought  of  Hastie 
&  Hutchinson,  a  cargo  of  about  1,180  (say  eleven  hundred  and  eighty) 
quarters  of  Salonica  Indian  corn,  of  fair  average  quality  when  shipped 
per  the  Kezia  Page,  Captain  Page,  from  Salonica ;  bill  of  lading  dated 
twenty-second  P'ebruary,  at  27s.  (say  twenty-seven  shillings)  per  quar-^ 
ter,  free  on  board,  and  including  freight  and  insurance,  to  a  safe  port 
in  the  United  Kingdom,  the  vessel  calling  at  Cork  or  Falmouth  for 
orders ;  measure  to  be  calculated  as  customary ;  payment  at  two 
months  from  this  date,  or  in  cash,  less  discount,  at  the  rate  of  five 
per  cent,  per  annum  for  the  unexpired)  time,  upon  handing  shipping 
documents." 

In  the  early  part  of  the  homeward  voyage,  the  cargo  became  so 
heated  that  the  vessel  was  obliged  to  put  into  Tunis,  where,  after  a 
survey  and  other  proceedings,  regularly  and  bona  fide  taken,  the' cargo 
was,  on  the  22d  Ai)ril,  unloaded  and  sold     It  did  not'  appear  that 


3  74  REALITY    OF   CONSENT 

either  party  knew  of  these  circumstances  at  the  time  of  the  sale.  The 
contract  having  been  made  on  the  15th  of  May,  Mr.  Callander,  on  the 
23d  of  May,  wrote  to  Hastie  &  Hutchinson :  "I  repudiate  the  contract 
of  the  cargo  of  Indian  corn,  per  the  Kezia  Page,  on  the  ground  that 
the  cargo  did  not  exist  at  the  date  of  the  contract,  it  appearing  that  the 
news  of  the  condemnation  and  sale  of  this  cargo  at  Tunis,  on  the  22d 
April,  was  published  at  Lloyds,  and  other  papers,  on  the  12th  instant, 
being  three  to  four  days  prior  to  its  being  offered  for  sale  to  me." 

The  plaintiffs  afterwards  brought  thi^  action.  The  declaration  was 
in  the  usual  form.  The  defendants  pleaded  several  pleas,  of  which  the 
first  four  are  not  now  material  to  be  considered.  The  fifth  plea  was  that 
before  the  sale  to  Callander,  and  whilst  the  vessel  was  on  the  voyage, 
the  plaintiffs  sold  and  delivered  the  corn  to  other  persons,  and  that 
since  such  sale  the  plaintiffs  never  had  any  property  in  the  corn  or  any 
right  to  sell  or  dispose  thereof,  and  that  Callander  on  that  account 
repudiated  the  sale,  and  refused  to  perform  his  contract,  or  to  pay  the 
price  of  the  corn.  Sixthly,  that  before  the  defendants  were  employed 
by  the  plaintiffs,  the  corn  had  become  heated  and  greatly  damaged  in 
the  vessel,  and  had  been  unloaded  by  reason  thereof,  and  sold  and 
disposed  of  by  the  captain  of  the  said  vessel  on  account  of  the  plain- 
tiffs at  Tunis,  and  that  Callander,  for  that  reason,  repudiated  the 
sale.  &c. 

The  cause  was  tried  before  Mr.  Baron  Martin,  when  his  lordship 
ruled  that  the  contract  imported  that  at  the  time  of  the  sale  the  corn 
was  in  existence  as  such,  and  capable  of  delivery,  and  that,  as  it  had 
been  sold  and  delivered  by  the  captain  before  this  contract  was  made, 
the  plaintiffs  could  not  recover  in  the  action.  He  therefore  directed  a 
verdict  for  the  defendants.  The  case  was  afterwards  argued  in  the 
court  of  exchequer  before  the  Lord  Chief  Baron,  Mr.  Baron  Parke, 
and  Mr.  Baron  Alderson,  when  the  learned  judges  dift'ered  in  opinion, 
and  a  rule  was  drawn  up  directing  that  the  verdict  found  for  the  de- 
fendants should  be  set  aside  on  all  the  pleas,  except  the  sixth,  and  that 
on  that  plea  judgment  should  be  entered  for  the  plaintiffs,  non  obstante 
veredicto.  That  the  defendants  should  be  at  liberty  to  treat  the  deci- 
sion of  the  court  as  the  ruling  at  nisi  prius,  and  to  put  it  on  the  record 
and  bring  a  bill  of  exceptions.  8  Exch.  40.  This  was  done,  and  the 
lord  chief  baron  sealed  the  bill  of  exceptions,  adding,  however,  a  mem- 
orandum to  the  effect  that  he  did  so  as  the  ruling  of  the  court,  but  that 
his  own  opinion  was  in  opposition  to  such  ruling. 

The  case  was  argued  on  the  bill  of  exceptions  in  the  exchequer 
chamber,  before  Justices  Coleridge,  Maule,  Cresswell,  Wightman,  Will- 
iams, Talfourd  and  Crompton  who  were  unanimously  of  opinion  that 
the  judgment  of  the  court  of  exchequer  ought  to  be  reversed.  9  Exch, 
102.    The  present  writ  of  error  was  then  brought. 

The  judges  were  summoned  and  Mr.  Baron  Alderson,  Mr.  Justice 
Wightman,  Mr.  Justice  Cresswell,  Mr.  Justice  Erie,  Mr.  Justice  Wil- 


MISTAKE  175 

Hams,  Mr.  Baron  Martin,  Mr.  Justice  Crompton,  Mr.  Justice  Willes, 
and  Mr.  Baron  Bramwell  attended. 

Cranworth,  L.  Ch.  My  lords,  this  case  has  been  very  fully  and 
ably  argued  on  the  part  of  the  plaintiffs  in  error,  but  I  understand  from 
an  intimation  which  I  have  received  that  all  the  learned  judges  who  are 
present,  including  the  learned  judge  who  was  of  a  different  opinion 
in  the  court  of  exchequer,  before  the  case  came  to  the  exchequer  cham- 
ber, are  of  opinion  that  the  judgment  of  the  court  of  exchequer  cham- 
ber sought  to  be  reversed  by  this  writ  of  error  was  a  correct  judgment, 
and  they  come  to  that  opinion  without  the  necessity  of  hearing  the 
counsel  for  the  defendants  in  error.  If  I  am  correct  in  this  belief,  I 
will  not  trouble  the  learned  counsel  for  the  defendants  in  error  to  adl- 
dress  your  lordships,  because  I  confess,  though  I  should  endeavor  to 
keep  my  mind  suspended  till  the  case  had  been  fully  argued,  that  my 
strong  impression  in  the  course  of  the  argument  has  been,  that  the 
judgment  of  the  court  of  exchequer  chamber  is  right.  I  should  there- 
fore simply  propose  to  ask  the  learned  judges  whether  they  agree  in 
thinking  that  that  judgment  was  right.  [The  judges  consulted  to- 
gether for  a  few  minutes,  at  the  end  of  which  time] 

]\Ir.  Baron  Alderson  said:  My  lords,  her  majesty's  judges  are 
unanimously  of  opinion  that  the  judgment  of  the  exchequer  chamber 
was  right,  and  that  the  judgment  of  the  court  of  exchequer  was  wrong; 
and  I  am  also  of  that  opinion  myself  now,  having  been  one  of  the  judg- 
es before  whom  the  case  came  to  be  heard  in  the  court  of  exchequer. 

The  Lord  Chancellor.  My  lords,  that  being  so,  I  have  no  hesita- 
tion in  advising  your  lordships,  and  at  once  moving  that  the  judgment 
of  the  court  below  should  be  affirmed.  It  is  hardly  necessary,  and  it 
has  not  ordinarily  been  usual,  for  your  lordships  to  go  much  into  the 
merits  of  a  judgment  which  is  thus  unanimously  affirmed  by  the  judges 
who  are  called  in  to  consider  it,  and  to  assist  the  house  in  forming  its 
judgment.  But  I  may  state  shortly  that  the  whole  question  turns  upon 
the  construction  of  the  contract  which  was  entered  into  between  the 
parties.  I  do  not  mean  to  deny  that  many  plausible  and  ingenious  ar- 
guments have  been  pressed  by  both  the  learned  counsel  who  have  ad- 
dressed your  lordships,  showing  that  there  might  have  been  a  meaning 
attached  to  that  contract  dift'erent  from  that  which  the  words  them- 
selves import.  If  this  had  depended  not  merely  upon  construction  of 
the  contract  but  upon  evidence,  which,  if  I  recollect  rightly,  was  re- 
jected at  the  trial,  of  what  mercantile  usage  had  been,  I  sItouUI  not 
have  been  prepared  to  say  that  a  long-continued  mercantile  usage  in- 
terpreting such  contracts  might  not  have  been  sufficient  to  warrant,  or 
even  to  compel,  your  lordshi[>s  to  adopt  a  different  construction.  But, 
in  the  absence  of  any  such  evidence,  looking  to  the  contract  itself  alone, 
it  appears  to  me  clearly  that  what  the  parties  contemplated — those  who 
bought  and  those  who  sold — was  that  there  was  an  existing  something 
to  be  sold  and  bought,  and  if  sold  and  bought  then  the  benefit  of  in- 


176  REALITY  CF   CONSENT 

surance  should  go  with  it.  I  do  not  feel  pressed  by  the  latter  argu- 
ment, which  has  been  brought  forward  very  ably  by  Mr.  Wilde,  de- 
rived from  the  subject  of  insurance.  I  think  the  full  benefit  of  the 
insurance  was  meant  to  go  as  well  to  losses  and  damage  that  occurred 
previously  to  the  15th  of  May  as  to  losses  and  damage  that  occurred 
subsequently,  always  assuming  that  something  passed  by  the  contract 
of  the  15th  of  May.  If  the  contract  of  the  15th  of  May  had  been 
an  operating  contract,  and  there  had  been  a  valid  sale  of  a  cargo  "at 
that  time  existing,  I  think  the  purchaser  would  have  had  the  benefit  of 
insurance  in  respect  of  all  damage  previously  occurring.  The  contract 
plainly  imports  that  there  was  something  which  was  to  be  sold  at  the 
time  of  the  contract,  and  something  to  be  purchased. 

No  such  thing  existing,  I  think  the  court  of  exchequer  chamber 
has  come  to  the  only  reasonable  conclusion  upon  it,  and  consequently 
that  there  must  be  judgment  given  by  your  lordships  for  the  defend- 
ants in  error.    Judgment  for  the  defendants  in  error,  with  costs. 


(B)  Mistake  as  to  Identity  of  Subject-Matter 


IRWIN  V.  WILSON. 

(Supreme  Court  of  Ohio,  1887.     45  Ohio  St.  426,  15  N.  E.  209.) 

MiNSHAivL,  J.,*  *  *  *  From  the  facts  found  by  the  court  it 
appears  that  the  defendant,  being  the  owner  of  a  tract  of  land  in  the 
state  of  Iowa,  proposed,  by  his  agent,  to  exchange  it  for  the  house  and 
lot  of  the  plaintiff,  in  the  town  of  Kenton.  Both  were  well  acquainted 
with  the  property  of  the  plaintiff;  but,  being  uninformed  as  to  the 
land  in  Iowa,  the  agent  of  the  defendant  procured  a  conveyance,  andi, 
at  his  suggestion,  he  and  the  plaintiff  went  to  see  one  Pugh,  though  a 
stranger  to  both  of  them,  residing  in  the  county  where  they  did,  the 
agent  saying,  that  he  understood  that  Pugh  was  acquainted  with  the 
land.  On  arriving  at  Pugh's,  he  informed  them  that -he  had  seen  the 
land ;  that  he  had  been  on  it  the  year  before,  and  that  it  was  good, 
dry,  tillable  land,  near  the  county-seat ;  that  it  was  worth  $10  an  acre 
when  he  saw  it,  and  would  then  be  worth  more.  In  a  few  days  after- 
wards, the  agreement  for  the  exchange  was  made,  and  executed  by  the 
plaintiff',  conveying  his  house  and  lot  to  the  defendant,  who  conveyed 
to  the  plaintiff  his  land  in  Iowa  containing  80  acres,  and  also  made  and 
delivered  to  the  plaintiff  two  notes  amounting  to  $700,  secured  by  mort- 

*  The  statement  of  facts  and  a  portion  of  the  opinion  are  omitted. 


MISTAKE  177 

gage  on  the  house  and  lot  conveyed  by  the  plaintiff,  as  the  equivalent 
of  the  supposed  difference  in  the  value  of  the  lands  exchanged.  In 
a  few  months  afterwards,  the  plaintiff  discovered  that  the  land  in  Iowa 
was  not  such  as  it  had  been  described  by  Pugh ;  that  it  was  unfit  for 
cultivation,  being  wet  and  marshy,  and  worth  not  more  than  three  dol- 
lars an  acre.  The  error  arose  from  the  fact  that  Pugh  was  mistaken 
in  the  ownership  of  the  land  he  had  seen ;  the  land  he  had  seen  and 
described  to  the  plaintiff  and  the  agent  of  the  defendant,  was  such  as 
he  had  described  it  to  be,  but  was  not  the  land  of  the  defendant,  though 
he  thought  it  was.  The  mistake  was  in  the  identity  of  the  land  seen 
and  described  by  Pugh. 

Thereupon  the  plaintiff  offered!  to  rescind,  which  was  refused  by  the 
defendant.  The  refusal  is  placed,  not  upon  the  ground  that  he  cannot 
be  restored  to  his  former  condition  by  the  plaintiff,  but  that,  upon  the 
facts  as  found,  there  is  no  ground  for  rescission ;  there  being,  as  claim- 
ed, no  mutual  mistake,  and  no  fraud  found  by  the  court.  While  no 
fraud  is  found  by  the  court,  does  it  not,  however,  clearly,  if  not  neces- 
sarily, follow  from  the  circumstances  under  which  the  exchange  was 
made,  that  there  was  a  mutual  mistake  of  the  parties  as  to  the  char- 
acter and  value  of  the  lands  in  Iowa?  We  think  it  does.  Both  par- 
ties were  in  ignorance  as  to  the  true  character  of  the  land  of  the  de- 
fendant. If  it  had  been  otherwise,  the  court  could  not  have  found  that 
there  was  no  fraud.  It  found  that  the  plaintiff  believed  and  relied  on 
the  information  given  by  Pugh ;  and  if  the  defendant,  by  his  agent, 
was  acting  in  good  faith,  he  must  have  done  the  same  thing;  for  it 
will  hardly  be  affirmed  by  any  one  that,  under  the  circumstances  of 
this  case,  he  could  without  fraud  have  concluded  the  exchange,  know- 
ing that  the  land  was  not  such  as  it  had  been  described  by  Pugh,  for 
he  must  have  known,  if  he  knew  anything,  that  the  plaintiff  believed 
what  was  said  to  him  by  the  person  to  whom  he  had  taken  him  for 
information.  He  knew  it  from  the  fact  that  the  plaintiff  concluded 
the  agreement  for  an  exchange  on  the  basis  of  that  information.  So 
that,  under  the  circumstances,  it  would  be  perilous  for  the  defendant 
to  claim  that  neither  he  nor  his  agent  believed  the  statements  of  Pugh 
as  to  the  character  of  the  Iowa  land;  for,  if  that  had  been  the  fact, 
he  could  not  have  concluded  the  exchange  on  the  basis  of  the  informa- 
tion being  true,  without  perpetrating  a  fraud  on  the  plaintiff,  whether 
he  made  any  positive  representations  or  not.  Pol.  Cont.  (Wald's  Ed.) 
429.  But  his  belief  or  disbelief  as  to  this  is  not  a  matter  of  mere 
argument,  for,  while  there  is  no  specific  finding  on  the  question,  it 
is  made  certain  by  the  pleading^. 

In  answering  the  averments  of  the  petition,  the  defendant  affirms 
m  his  pleading  that  the  description  given  of  the  land  by  Pugh  was  not 
untrue,  and  that  there  was  no  mistake  in  the  identity  of  the  land  seen 
by  him.     Therefore,  unless  we  may  conclude  that  he  had  one  belief 

TUBOCKM.CONT. — 12 


178  REALITY   OF   CONSENT 

as  to  the  matter  when  he  conckided  the  exchange,  and  another  when 
he  filed  his  answer, — a  thing  quite  impossible  if  not  absurd, — we  may 
safely  conclude  that,  as  a  fact  apparent  on  the  record,  he  had  the  same 
belief  as  to  the  accuracy  of  the  statements  made  by  Pugh  that  the 
plaintifif  had.  But  the  positive  findings  of  the  court  are  that  Pugh  was 
mistaken  as  to  the  identity  of  the  land,  and  that  that  owned  by  the  de- 
fendant was  not  of  the  description  given  by  him.  So  that  the  only 
question  that  remains  is,  not  whether  there  was  a  mutual  mistake  in 
regard  to  the  land,  but  whether  it  is  such  a  one  as  under  the  circum- 
stances entitles  the  plaintiff  to  a  rescission.  Here  we  must  observe 
that  the  mistake  arose  not  from  a  mistaken  opinion  of  Pugh  as  to  the 
character  of  the  defendant's  lands  ;  for,  if  he  had  in  fact  seen  the  land, 
and  simply  erred  in  his  opinion  as  to  its  character  and  value,  a  different 
question  might  have  been  presented.  It  is  a  matter  of  common  knowl- 
edge that  opinions  will  differ  in  this  regard ;  and  the  plaintiff,  in  rely- 
ing on  the  statements  of  P.  as  to  the  quality  of  the  defendant's  land, 
might  be  held  as  assuming  the  possibility  of  a  mistake  in  his  judgment 
as  to  this.  But  Pugh  did  not  see  the  land  of  defendant ;  he  was  mistak- 
en in  its  identity.  Such  errors  are  less  frequent  than  the  former ;  and 
a  fault  rould  hardly  be  imputed  to  any  one  in  not  anticipating  an 
error  of  this  kind.    2  Pom.  Eq.  Jur.  §  852. 

It  is  against  mistakes  of  this  character  that  the  courts  have  been 
most  prompt  to  relieve;  and  not  only  for  the  reason  that  they  may 
happen  where  the  greatest  caution  is  observed,  but  also,  that,  as  a  mat- 
ter of  law,  where  they  do  occur,  no  real  contract  is  formed.  Thus,  in 
Wheadon  v.  Olds,  20  Wend.  (N.  Y.)  174,  a  sale  had  been  made  of  a 
quantity  of  oats  in  bulk,  upon  an  estimate  of  the  quantity,  after  a 
portion  had  been  measured.  The  estimate  of  the  quantity  unmeasured 
was  made  by  a  comparison  of  the  measured  with  the  unmeasured  pile, 
and  the  purchaser  agreed  to  take  them  at  the  estimate,  "hit  or  miss," 
as  to  quantity,  and  paid  for  them  at  the  estimated  quantity.  The  oats 
did  not  hold  out  within  about  300  bushels  of  the  quantity  estimated  and 
paid  for.  It  was  afterwards  discovered  that  a  mistake  had  been  made 
in  regard  to  the  quantity  measured,  which  formed  the  basis  of  the 
estimate,  in  counting  the  tallies  as  bushels,  instead  of  half-bushels,  as 
they  were  in  fact.  Upon  these  facts  the  plaintiff  was  allowed  to  re- 
cover back  the  money  paid  for  the  entire  quantity  which  he  did  not 
receive.  The  case  was  followed  in  Coon  v.  Smith,  29  N.  Y.  393,  where 
it  was  cited  as  showing  "the  length  courts  will  go  in  disregard  of  con- 
tracts founded!  in  a  mistake  of  material  facts,  and  in  the  protection  of 
rights  prejudiced  thereby."  There  an  agreement  between  adjoining 
land-owners,  by  which  a  corner  had  been  erroneously  fixed  by  reason 
of  a  miscount  of  the  chain-men,  was  held  not  to  be  binding,  although 
it  had  been  acted  on  by  both  parties  before  the  mistake  was  discovered. 
The  error  of  the  chain-men,  being  unknown  to  the  parties,  invalidated 
the  as^reement  fixins:  the  corner. 


MISTAKE  179 

So  in  Gardner  v.  Lane,  9  Allen  (Mass.)  492,  85  Am.  Dec.  779,  W. 
had  agreed  to  sell  G.  135  barrels  of  No.  1  mackerel.  By  mistake  of  the 
parties  in  making  the  delivery,  some  two  months  afterwards,  part  of 
the  barrels  marked  to  indicate  delivery  were  No.  3  mackerel,  and!  part 
were  salt.  In  replevin  by  the  purchaser  against  a  creditor  of  the  seller 
who  had  levied  on  the  property,  it  was  held  that  no  property  passed  in 
the  barrels  so  marked  by  mistake,  even  as  to  those  containing  No.  3 
mackerel;  the  court  saying:  "They  are  not  included  within  the  con- 
tract of  sale;  the  vendor  has  not  agreed  to  sell,  nor  the  vendee  to  pur- 
chase them;  the  subject-matter  of  the  contract  has  been  mistaken,  and 
neither  party  can  be  held  to  an  execution  of  the  contract  to  which 
he  has  not  given  his  assent.  It  is  a  case  where,  through  mutual  mis- 
apprehension, the  contract  of  sale  is  incomplete."  See.  also,  the  same 
case,  12  Allen  (Mass.)  39,  where  the  ruling,  when  it  was  again  brought 
before  the  court,  was  adhered  to. 

The  principle  of  these  cases  is  quite  as  applicable  to  contracts  for 
the  sale  and  conveyance  of  land,  induced  by  the  mutual  mistake  of  tlie 
parties,  as  to  contracts  concerning  personalty ;  and  the  equitabk  re- 
lief of  rescission  will  be  granted,  where  such  mistakes  have  intervened, 
quite  as  readily  in  the  one  case  as  in  the  other,  if  not  more  so.  Pol. 
Cont.  (Wald's  Ed.)  430,  and  cases  cited  in  the  notes ;  2  Pom.  Eq.  Jur. 
§  869;  Crowe  v.  Lewin,  95  N.  Y.  426;  Lawrence  v.  Staigg,  8  R.  I. 
256;  Gilroy  v.  Alis,  22  Iowa,  174;  Irick  v.  Fulton,  3  Grat.  (Va.)  193; 
Barfield  v.  Price,  40  Cal.  535;  Knapp  v.  Fowler,  30  Hun  (N.  Y.)  513; 
Rhode  Island  v.  Massachusetts,  13  Pet.  23,  10  L.  Ed.  41 ;  and  Mulvey 
V.  King,  39  Ohio  St.  491,  495  (Upson,  J.). 

In  the  case  presented  by  the  record  before  us,  the  mistake  was  in  the 
identity  of  the  land)  that  had  been  seen  and  described  by  Pugh.  He 
supposed  it  to  be  the  land  about  which  the  parties  were  contracting  and 
desired  information ;  the  error  was  in  this,  and  not  in  the  description 
of  the  land  he  had  seen ;  hence  the  parties,  in  acting  upon  his  informa- 
tion, acted  upon  the  same  error  of  fact ;  and,  upon  principle,  the  case 
is  not  different  from  what  it  would  have  been  had  they  gone  to  see  the 
land  described  by  P.,  supposing  it  to  be  the  land  of  the  defendant ; 
and  that  such  an  error  would,  on  the  ground  of  mutual  mistake,  have 
avoided  the  contract,  is,  we  think,  too  plain  to  admit  of  a  question. 
In  treating  of  the  subject  of  mistake,  Mr,  Pollock,  in  his  work  on  Con- 
tracts, observes :  "It  may  happen  that  there  does  exist  a  common  in- 
tention, which,  however,  is  founded  on  an  assumption  made  by  both 
parties  as  to  some  matter  of  fact  essential  to  the  agreement.  In  this 
case  the  common  intention  must  stand  or  fall  with  the  assumption  on 
which  it  is  founded.  If  the  assumption  is  wrong,  the  intention  of  the 
parties  is  from  the  outset  incapable  of  taking  effect.  Ihit  for  their 
common  error  it  would  never  have  been  formed,  and  it  is  treated  as 
nonexistent.  Here  there  is  in  some  sense  an  agreement,  but  it  is  mini- 
fied in  its  inception  by  the  nullity  of  the  thing  agreed  ujkdu;   and  it  is 


ISO  EEALITY   OF   CONSENT 

hardly  too  artificial  to  say  that  there  is  no  real  agreement.  The  result 
is  the  same  as  if  the  parties  had  made  an  agreement  expressly  condi- 
tional on  the  existence  at  the  time  of  the  supposed  state  of  facts ;  which 
state  of  facts  not  existing,  the  agreement  destroys  itself."  Pol.  Cont. 
412.     See,  also,  Fonbl.  Eq.  marg.  p.  120;    Kerr,  Fraud  &  M.  431. 

The  case  of  Crist  v.  Dice,  18  Ohio  St.  536,  on  which  much  reliance 
is  placed  by  counsel  for  defendant  in  error,  is  plainly  distinguishable 
from  this  one.  It  was  an  action  for  rescission  on  the  ground  of  fraud. 
The  defendant  claimed,  and  introduced  evidence  that,  though  he  had 
exhibited  to  the  plaintiff  a  letter  from  a  stranger,  representing  the  land 
as  favorably  situated,  and  of  good  quality,  and  stated  to  the  plaintiff 
that  he  had  bought  the  land  on  the  strength  of  this  description  he  re- 
fused to  vouch  for  its  truth,  and  advised  the  plaintiff  to  go  and  see 
for  himself.  The  plaintiff  declined  to  take  the  trouble,  and  agreed  to 
make  the  exchange  at  his  own  risk.  There  was  no  finding  of  facts, 
and  the  case  was  disposed  of  on  the  assumption  that  the  court  below 
may  have  believed  the  defendant's  version  ;  and,  adopting  it,  the  plain- 
tiff had,  of  course,  no  ground  for  relief.  This  sufficiently  distinguishes 
the  case  from  the  one  presented  by  this  record.  We  are  unable  to  per- 
ceive upon  what  principle  of  justice  the  plaintiff  should  be  denied  the 
relief  he  asks.  The  information  upon  which  he  acted  had  not  been 
obtained  in  a  casual  meeting  with  Mr.  Pugh.  The  defendant,  by  his 
agent,  having  suggested  that  P.  was  acquainted  with  the  land,  and 
taken  the  plaintiff  to  inquire  of  him  about  it,  is  estopped  from  saying 
that  P.  was  a  stranger,  and  he  had  no  right  to  rely  on  what  he  said. 
Moreover,  the  error  did  not  occur  from  any  bad  faith  in  P.,  but  from 
a  mistake  that  may  happen  to  the  most  careful  of  men.  As  the  mis- 
take arose  from  an  innocent  error  in  all  the  parties,  natural  justice 
forbids  that  the  loss  of  one  arising  out  of  it  should  be  the  gain  of  the 
other. 

Judgment  reversed,  and  judgment  rendered  for  the  plaintiff  in  error, 
rescinding  the  exchange  made  by  the  parties. 


(C)  Mistake  as  to  Nature  and  Essential  Qualities  of  Subject-Matter 


WOOD  V.  BOYNTON  et  al. 

(Supreme  Court  of  Wisconsin,  ISSo.     64  Wis.  265,  25  N.  W.  42,  54 

Am.  Rep.  610.) 

Taylor,  J.  This  action  was  brought  in  the  circuit  court  for  Mil- 
waukee county  to  recover  the  possession  of  an  uncut  diamond  of  thfe 
alleged  value  of  $1,000.    The  case  was  tried  in  the  circuit  court,  and 


MISTAKE  181 

after  hearing  all  the  evidence  in  the  case,  the  learned  circuit  judge  di- 
rected the  jury  to  find  a  verdict  for  the  defendants.  The  plaintiff 
excepted  to  such  instruction,  and,  after  a  verdict  was  rendered  for  the 
defendants,  moved  for  a  new  trial  upon  the  minutes  of  the  judge. 
The  motion  was  denied,  and  the  plaintiff  duly  excepted,  and  after 
judgment  was  entered  in  favor  of  the  defendants,  appealed  to  this 
court. 

The  defendants  are  partners  in  the  jewelry  business.  On  the  trial 
it  appeared  that  on  and  before  the  twenty-eighth  of  December,  1883. 
the  plaintiff  was  the  owner  of  and  in  the  possession  of  a  small  stone  of 
the  nature  and  value  of  which  she  was  ignorant ;  that  on  that  day  she 
sold  it  to  one  of  the  defendants  for  the  sum  of  one  dollar.  After- 
wards it  was  ascertained  that  the  stone  was  a  rough  diamond,  and  of 
the  value  of  about  $700.  After  hearing  this  fact  the  plaintiff  tendered 
the  defendants  the  one  dollar,  and  ten  cents  as  interest,  and  demanded 
a  return  of  the  stone  to  her.  The  defendants  refused  to  deliver  it, 
and  therefore  she  commenced  this  action. 

The  plaintiff  testified  to  the  circumstances  attending  the  sale  of  the 
stone  to  Mr.  Samuel  B.  Boynton,  as  follows :  "The  first  time  Boynton 
saw  that  stone  he  was  talking  about  buying  the  topaz,  or  whatever  it 
is,  in  September  or  October.  I  went  into  the  store  to  get  a  little  pin 
mended,  and  I  had  it  in  a  small  box, — the  pin, — a  small  ear-ring; 
*  *  *  this  stone,  and  a  broken  sleeve-button  were  in  the  box. 
Mr.  Boynton  turned  to  give  me  a  check  for  my  pin.  I  thought  I 
would  ask  him  what  the  stone  was,  and  I  took  it  out  of  the  box  and 
asked  him  to  please  tell  me  what  that  was.  He  took  it  in  his  hand  and 
seemed  some  time  looking  at  it.  I  told  him  I  had  been  told  it  was  a 
topaz,  and  he  said  it  might  be.  He  says,  *I  would  buy  this;  would 
you  sell  it?'  I  told  him  I  did  not  know  but  what  I  would.  What 
would  it  be  worth?  And  he  said  he  did  not  know;  he  would  give 
me  a  dollar  and  keep  it  as  a  specimen,  and  I  told  him  I  would  not  sell 
it;  and  it  was  certainly  pretty  to  look  at.  He  asked  me  where  I 
found  it,  and  I  told  him  in  Eagle.  He  asked  about  how  far  out,  and 
I  said  right  in  the  village,  and  I  went  out.  Afterwards,  and  about 
the  twenty-eighth  of  December,  I  needed  money  pretty  badly,  and 
thought  every  dollar  would  help,  and  I  took  it  back  to  Mr.  Boynton 
and  told  him  I  had  brought  back  the  topaz,  and  he  says,  'Well,  yes ; 
what  did  I  offer  you  for  it?'  and  I  says,  'One  dollar;'  and  he  stepped 
to  the  change  drawer  and  gave  me  the  dollar,  and  I  went  out." 

In  another  part  of  her  testimony  she  says :  "Before  I  sold  the  stone 
I  had  no  knowledge  whatever  that  it  was  a  diamond.  I  told  him  that 
I  had  been  advised  that  it  was  probably  a  topaz,  and  he  said  probably 
it  was.  The  stone  was  about  the  size  of  a  canary  bird's  egg,  nearly 
the  shape  of  an  egg, — worn  pointed  at  one  end;  it  was  nearly  straw 
color, — a  little  darker."  She  also  testified  that  before  this  action  was 
commenced  she  tendered  the  defendants  $1.10,  and  demanded  the  re- 
turn of  the  stone,  which  they  refused.     This  is  substantially  all  the 


1S2  REALITY   OF   CONSENT 

evidence  of  what  took  place  at  and  before  the  sale  to  the  defendants, 
as  testified  to  by  the  plaintiff  herself.  She  produced  no  other  witness 
on  that  point. 

The  evidence  on  the  part  of  the  defendant  is  not  very  different  from 
the  version  given  by  the  plaintiff',  and  certainly  is  not  more  favorable 
to  the  plaintiff".  Mr.  Samuel  B.  Boynton,  the  defendant  to  whom  the 
stone  was  sold,  testified  that  at  the  time  he  bought  this  stone,  he  had 
never  seen  an  uncut  diamond;  had  seen  cut  diamonds,  but  they  are 
quite  different  from  the  uncut  ones ;  "he  Tiad  no  idea  this  was  a  dia- 
mond, and  it  never  entered  his  brain  at  the  time."  Considerable  evi- 
dence was  given  as  to  what  took  place  after  the  sale  and  purchase, 
but  that  evidence  has  very  little  if  any  bearing,  upon  the  main  point 
in  the  case. 

This  evidence  clearly  shows  that  the  plaintiff  sold  the  stone  in 
question  to  the  defendants,  and  delivered  it  to  them  in  December, 
1883,  for  a  consideration  of  one  dollar.  By  such  sale  the  title  to  the 
stone  passed  by  the  sale  and  delivery  to  the  defendants.  How  has 
that  title  been  divested  and  again  vested  in  the  plaintiff?  The  con- 
tention of  the  learned  counsel  for  the  appellant  is  that  the  title  became 
vested  in  the  plaintiff  by  the  tender  to  the  Boyntons  of  the  purchase 
money  with  interest,  and  a  demand  of  a  return  of  the  stone  to  her. 
Unless  such  tender  and  demand  revested  the  title  in  the  appellant,  she 
cannot  maintain  her  action. 

The  only  question  in  the  case  is  whether  there  was  anything  in  the 
sale  which  entitled  the  vendor  (the  appellant)  to  rescind  the  sale  and 
so  revest  the  title  in  her.  The  only  reasons  we  know  of  for  rescinding 
a  sale  and  revesting  the  title  in  the  vendor  so  that  he  may  maintain  an 
action  at  law  for  the  recovery  of  the  possession  against  his  vendee  are 
(1)  that  the  vendee  was  guilty  of  some  fraud  in  procuring  a  sale  to 
be  made  to  him;  (2)  that  there  was  a  mistake  made  by  the  vendor  in 
delivering  an  article  which  was  not  the  article  sold, — a  mistake  in  fact 
as  to  the  identity  of  the  thing  sold  with  the  thing  delivered  upon  the 
sale.  This  last  is  not  in  reality  a  rescission  of  the  sale  made,  as  the 
thing  delivered  was  not  the  thing  sold,  and  no  title  ever  passed  to  the 
vendee  by  such  delivery. 

In  this  case,  upon  the  plaintiff's  own  evidence,  there  can  be  no 
just  ground  for  alleging  that  she  was  induced  to  make  the  sale  she 
did  by  any  fraud  or  unfair  dealings  on  the  part  of  Mr.  Boynton.  Both 
were  entirely  ignorant  at  the  time  of  the  character  of  the  stone  and  of 
its  intrinsic  value.  Mr.  Boynton  was  not  an  expert  in  uncut  diamonds, 
and  had  made  no  examination  of  the  stone,  except  to  take  it  in  his 
hand  and  look  at  it  before  he  made  the  offer  of  one  dollar,  which  was 
refused  at  the  time,  and  afterwards  accepted  without  any  comment  or 
further  examination  made  by  Mr.  Boynton.  The  appellant  had  the 
stone  in  her  possession  for  a  long  time,  and  it  appears  from  her  own 
statement  that  she  had  made  some  inquiry  as  to  its  nature  and  quali- 
ties.   If  she  chose  to  sell  it  without  further  investigation  as  to  its  in- 


MISTAKE  183 

trinsic  value  to  a  person  who  was  guilty  of  no  fraud  or  unfairness 
which  induced  her  to  sell  it  for  a  small  sum,  she  cannot  repudiate 
the  sale  because  it  is  afterwards  ascertained  that  she  made  a  bad 
bargain.    Kennedy  v.  Panama,  etc..  Mail  Co.,  L.  R.  2  Q.  B.  580. 

There  is  no  pretense  of  any  mistake  as  to  the  identity  of  the  thing 
sold.  It  was  produced  by  the  plaintiff  and  exhibited  to  the  vendee 
before  the  sale  was  made,  and  the  thing  sold  was  delivered  to  the 
vendee  when  the  purchase  price  was  paid.  Kennedy  v.  Panama,  etc., 
Mail  Co.,  supra,  587;  Street  v.  Blay,  2  Barn.  &  Adol.  456;  Gom- 
pertz  V.  Bartlett,  2  El.  &  Bl.  849 ;  Gurney  v.  VVomersley,  4  El.  &  Bl. 
133 ;  Ship's  Case,  2  De  G.  J.  &  S.  544.  Suppose  the  appellant  had  pro- 
duced the  stone,  and  said  she  had  been  told  it  was  a  diamond,  and  she 
believed  it  was,  but  had  no  knowledge  herself  as  to  its  character  or 
value,  and  Mr.  Boynton  had  given  her  $500  for  it,  could  he  have  re- 
scinded the  sale  if  it  had  turned  out  to  be  a  topaz  or  any  other  stone 
of  very  small  value?  Could  Mr.  Boynton  have  rescinded  the  sale  on 
the  ground  of  mistake?  Clearly  not,  nor  could  he  rescind  it  on  the 
ground  that  there  had  been  a  breach  of  warranty,  because  there  was 
no  warranty,  nor  could  he  rescind  it  on  the  ground  of  fraud,  unless  he 
could  show  that  she  falsely  declared  that  she  had  been  told  it  was  a 
diamond,  or,  if  she  had  been  so  told,  still  she  knew  it  was  not  a  dia- 
mond.   See  Street  v.  Blay,  supra. 

It  is  urged,  with  a  good  deal  of  earnestness,  on  the  part  of  the 
counsel  for  the  appellant  that,  because  it  has  turned  out  that  the  stone 
was  immensely  more  valuable  than  the  parties  at  the  time  of  the  sale 
supposed  it  was,  such  fact  alone  is  a  ground  for  the  rescission  of  the 
sale,  and  that  fact  was  evidence  of  fraud  on  the  part  of  the  vendee. 
Whether  inadequacy  of  price  is  to  be  received  as  evidence  of  fraud, 
even  in  a  suit  in  equity  to  avoid  a  sale,  depends  upon  the  facts  known 
to  the  parties  at  the  time  the  sale  is  made.  When  this  sale  was  made 
the  value  of  the  thing  sold  was  open  to  the  investigation  of  both 
parties,  neither  knowing  its  intrinsic  value,  and,  so  far  as  the  evidence 
in  this  case  shows,  both  supposed  that  the  price  paid  was  adequate. 
How  can  fraud  be  predicated  upon  such  a  sale,  even  though  after- 
investigation  showed  that  the  intrinsic  value  of  the  thing  sold  was 
hundreds  of  times  greater  than  the  price  paid?  It  certainly  shows  no 
such  fraud  as  would  authorize  the  vendor  to  rescind  the  contract  and 
bring  an  action  at  law  to  recover  the  possession  of  the  tiling  sold. 
Whether  that  fact  would  have  any  influence  in  an  action  in  equity  to 
avoid  the  sale  we  need  not  consider.  See  Stettheimer  v.  Killip,  75 
N.  Y.  287;   Etting  v.  Bank  of  U.  S.,  11  Wheat.  59,  6  L.  Ed.  419. 

We  can  find  nothing  in  the  evidence  from  which  it  could  be  justly 
inferred  that  Mr.  Boynton,  at  the  time  he  offered  the  plaintiff  one 
dollar  for  the  stone,  had  any  knowledge  of  the  real  value  of  the  stone, 
or  that  he  entertained  even  a  belief  that  the  stone  was- a  diamond.  It 
cannot,  therefore,  be  said  that  there  was  a  suppression  of  knowledge 
on  the  part  of  the  defendant  as  to  the  value  of  the  slune  which  a  court 


184  REALITY    OF   CONSENT 

of  equity  might  seize  upon  to  avoid  the  sale.  The  following  cases 
show  that,  in  the  absence  of  fraud  or  warranty,  the  value  of  the 
property  sold,  as  compared  with  the  price  paid,  is  no  ground  for  a 
rescission  of  a  sale.  Wheat  v.  Cross,  31  Md.  99,  1  Am.  Rep.  28; 
Lambert  v.  Heath,  15  Mees.  &  W.  487;  Bryant  v.  Pember,  45  Vt. 
487;  Kuelkamp  v.  Kidding,  31  Wis.  503-511.  However  unfortunate 
the  plaintiff  may  have  been  in  selling  this  valable  stone  for  a  mere 
nominal  sum,  she  has  failed  entirely  to  make  out  a  case  either  of  fraud 
or  mistake  in  the  sale  such  as  will  entitle-  her  to  a  rescission  of  such 
sale  so  as  to  recover  the  property  sold  in  an  action  at  law. 
The  judgment  of  the  circuit  court  is  affirmed. 


4.  EP?eCT  OF  MiSTAKB — RKMEDIES 


See  Foster  v.  Mackinnon,  supra,  page  166;  Cundy  v.  Lindsay,  su- 
pra, page  169;  Couturier  v.  Hastie,  supra,  page  173;  Irwin  v.  Wilson, 
supra,  page  176. 


n.  Misrepresentation 


GLOBE  MUT.  LIFE  INS.  ASS'N  v.  WAGNER. 

fSupreme  Court  of  lUinois.   1900.     188  111.  133,   58  N.  E.   970,  52  L.   R.   A. 
649,  80  Am.  St.  Rep.  169.) 

Action  by  Dora  Wagner  against  the  Globe  Mutual  Life  Insurance 
Association.  From  judgment  of  the  appellate  court  (90  111.  App.  444) 
affirming  judgment  for  plaintiff,  defendant  appeals.     Affirmed. 

Appellee,  Dora  Wagner,  recovered  a  judgment  of  $250  in  a  suit  in 
assumpsit  in  the  superior  court  of  Cook  county  against  appellant,  the 
Globe  Mutual  Life  Insurance  Association  of  Chicago,  on  a  policy  of 
insurance  issued  to  her  on  the  life  of  her  son  Richard  Wagner.  The 
association  appealed  to  the  appellate  court,  where  the  judgment  of  the 
superior  court  was  affirmed,  and  now  prosecutes  this  further  appeal ; 
the  appellate  court  having  certified  that  the  cause  involves  questions 
of  law  of  such  importance  as  that  it  should  be  passed  upon  by  the  su- 
preme court. 

Wilkin,  J.  The  chief  ground  urged  by  appellant  for  a  reversal 
of  the  judgment  of  the  appellate  court  is  the  falsity  of  the  answer  to 
one  of  the  questions  appearing  in  the  medical  examination  of  the  in- 
sured. On  the  back  of  the  application  made  by  appellee,  in  what  pur- 
ports to  be  the  medical  examination  of  the  insured,  this  question  and 

5  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  135-13S. 


MISEEPKESENTATION  185 

answer  appear:  "O.  How  many  brothers  dead?  Ans.  None."  The 
medical  examination  is  certified  to  by  the  medical  examiner,  as  fol- 
lows: "I  certify  that  I  have  this  7th  day  of  October,  1895,  made  a 
personal  examination  of  the  above-named  person  (Richard  Wagner), 
and  that  the  above  answers  are  in  my  own  handwriting,  and  that  the 
signature  of  the  applicant  or  person  examined  was  written  in  my 
presence.     M.  J.  McKenna,  M.  D." 

Preceding  the  medical  examiner's  certificate,  and  immediately  at  the 
end  of  the  series  of  questions  and  answers  referred  to  in  the  certifi- 
cate, of  which  the  quoted  question  is  one,  appears  the  following  lan- 
guage, to  which  is  affixed  the  signature  of  Richard  Wagner,  the  in- 
sured :  "I  hereby  declare  and  warrant  that  the  answers  to  the  above 
questions,  and  the  statements  made  in  the  application  on  the  other  side 
hereof,  are  true,  and  were  written  by  me  or  by  my  proper  agent,  and 
that  said  answers  and  statements,  together  with  this  warranty,  shall 
form  the  basis  of  any  contract  of  insurance  that  may  be  entered  into 
between  me  and  the  Globe  Mutual  Insurance  Association,  and  that  if 
a  contract  of  insurance  is  issued  it  shall  not  be  binding  on  the  com- 
pany unless,  upon  its  date  and  delivery,  I  shall  be  in  sound  health." 

On  the  front  side  of  the  sheet,  on  the  back  of  which  is  the  medical 
examination  and  statement  signed,  as  above,  by  the  insured,  is  the 
application  by  appellee  for  the  policy,  and  over  her  signature  appears 
the  following:  "I  hereby  make  application  for  the  policy  described 
above,  and  as  an  inducement  to  the  association  to  issue  a  policy,  and 
as  a  consideration  therefor,  make  the  agreement  as  to  agency,  and 
all  other  agreements  and  warranties  contained  in  the  medical  exam- 
ination, as  fully  as  if  I  had  signed  the  same." 

It  appears  from  the  evidence  that  a  brother  of  the  insured  died  in 
London,  England,  more  than  four  years  prior  to  the  date  of  the  ap- 
plication for  insurance  in  this  case,  but  there  is  no  evidence  tending 
to  show  that  the  insured  ever  knew  of  his  brother's  death.  Appel- 
lant asserts,  however,  that,  whether  he  knew  of  it  or  not,  the  statement 
that  none  of  his  brothers  was  dead  is  a  warranty,  and  being  untrue, 
avoids  the  policy.  Appellee  contends  that  the  statement,  though  false, 
is  not  a  warranty,  but  a  mere  representation,  which,  unless  material, 
would  not  avoid  the  policy. 

In  the  absence  of  explicit,  unequivocal  stipulations  requiring  such 
an  interpretation,  it  should  not  be  inferred  that  the  insured  or  the  ap- 
pellee took  a  life  policy  with  the  distinct  understanding  that  it  should 
be  void  if  any  statements  made  in  the  medical  examination  should  be 
false,  whether  the  insured  was  conscious  of  the  falsity  thereof  or  not. 
Moulor  V.  Insurance  Co.,  Ill  U.  S.  335,  4  Sup.  Ct.  466,  2S  L.  Ed.  447. 
Whether  or  not  the  deceased  knew  of  the  death  of  his  brother  at  the 
time  of  the  application  for  insurance  was  a  question  for  the  jury,  and 
no  evider.ce  of  such  knowledge  appears  in  the  record.  To  hold  that, 
as  a  precedent  to  any  binding  contract,  he  should  guaranty  absolutely 
that  none  of  his  brothers  were  dead  would  be  unreasonable,  in  the 


186  REALITY   OF   CONSENT 

absence  of  a  more  explicit  stipulation  than  here  appears.  It  not  in- 
frequently happens  that  a  man  loses  trace  of  all  or  a  part  of  his  rela- 
tions, and  to  hold  him  to  absolutely  guaranty  that  they  were  living,  in 
order  that  he  might  obtain  insurance,  would  sometimes  be  impossible, 
and  almost  absurd. 

What  is  said  in  Moulor  v.  Insurance  Co.,  supra,  is  peculiarly  appli- 
cable to  the  case  at  bar.  In  that  case  the  insured  made  a  false  state- 
ment as  to  his  having  had  certain  diseases,  and  "warranted  that  the 
above  are  fair  and  true  answers."  The  dourt  say :  "The  entire  argu- 
ment in  behalf  of  the  company  proceeds  upon  a  too  literal  interpreta- 
tion of  those  clauses  in  the  policy  and  application  which  declare  the 
contract  null  and  void  if  the  answers  of  the  insured  to  the  questions 
propounded  to  him  were  in  any  respect  untrue.  What  was  meant  by 
'true'  and  'untrue'  answers?  In  one  sense,  that  only  is  true  which  is 
conformable  to  the  actual  state  of  things.  In  that  sense  a  statement 
is  untrue  which  does  not  express  things  exactly  as  they  are,  but,  in 
another  and  broader  sense,  the  word  'true'  is  often  used  as  a  synonym 
of  honest;  sincere;  not  fraudulent.  Looking  at  all  the  clauses  in 
the  application,  in  connection  with  the  policy,  it  is  reasonably  clear — 
certainly  the  contrary  cannot  be  confidently  asserted — that  what  the 
company  required  of  the  applicant  as  a  condition  precedent  to  any 
binding  contract  was  that  he  would  observe  the  utmost  good  faith 
towards  it,  and  make  full,  direct,  and  honest  answers  to  all  questions, 
without  evasion  or  fraud,  and  without  suppression,  misrepresentation, 
or  concealment  of  facts  with  which  the  company  ought  to  be  made  ^ 
acquainted,  and  that  by  so  doing,  and  only  by  so  doing,  would  he  be 
deemed  to  have  made  fair  and  true  answers."  In  that  case  the  untrue 
statements  were  held  to  be  representations,  and  not  warranties,  and 
we  think,  on  the  same  reasoning,  the  answer  here  in  question  should 
be  so  held,  and,  in  the  absence  of  proof  by  the  company  of  fraud  or 
intentional  misstatement  on  the  part  of  the  insured,  the  policy  was  not 
rendered  invalid  merely  because  the  answer  proved  to  be  false. 

We  are  satisfied  the  court  below  committed  no  reversible  error,  and 
the  judgment  of  that  court  will  be  affirmed.    Judgment  affirmed. 


FRAUD  187 


^  III.  Fraud* 

1.  Fraud  is  a  False  Representation 


GRIGSBY  V.  STAPLETON. 

(Supreme  Court  of  Missouri,   ISSS.     94   Mo.  423,  7   S.  W.  421.) 

Black,  J.  This  was  a  suit  in  two  counts.  The  first  declares  for 
the  contract  price  of  100  head  of  cattle  sold  by  the  plaintiff  to  the  de- 
fendant; the  second  seeks  to  recover  the  value  of  the  same  cattle. 
The  contract  price,  as  well  as  the  value,  is  alleged  to  have  been  $3,- 
431.25.  The  answer  is— First,  a  general  denial;  second,  fraudulent 
representation  as  to  the  health  and  condition  of  the  cattle;  third, 
fraudulent  concealment  of  the  fact  that  they  had  the  Spanish  or  Texas 
fever;   fourth,  tender  of  their  value  in  their  diseased  condition. 

Plaintiff  purchased  105  head  of  cattle  at  the  stock-yards  in  Kansas 
City  on  Friday,  the  25th  July,  1884,  at  $3.60  per  cwt.  He  shipped 
them  to  Barnard  on  Saturday.  Mr.  Ray,  plaintiff's  agent,  attended  to 
the  shipment,  and  accompanied  the  cattle.  Ray  says  it  was  reported 
in  the  yards,  before  he  left  Kansas  City,  that  the  cattle  were  sick  with 
Texas  fever;  some  persons  said  they  were  sick,  and  some  said  they 
were  not.  When  the  cattle  arrived  at  Barnard,  Ray  told  the  plaintiff 
of  the  report,  and  that  the  cattle  were  in  bad  condition;  that  one  died 
in  the  yards  at  Kansas  City,  before  loading,  and  another  died  in  the 
cars  on  the  way.  On  Sunday  morning  the  plaintiff  started  with  them 
to  his  home.  After  driving  them  a  mile  or  so,  he  says  he  concluded  to 
and  did  drive  them  back  to  the  yards,  'because  they  were  wild.  One 
of  them  died  on  this  drive,  and  two  more  died  in  the  pen  at  Barnard 
before  the  sale  to  defendant.  There  is  mucl!  evidence  tending  to 
show  that  the  plaintiff  drove  cattle  back,  because  he  was  afraid  to 
take  them  to  his  neighborhood,  and  that  he  knew  they  were  diseased, 
and  dying  from  the  fever.  He  made  no  disclosure  of  the  fact  that 
the  cattle  were  sick  to  defendant,  nor  that  they  were  reported  to  have 
the  fever.  Defendant  bargained  for  the  cattle  on  Sunday  afternoon, 
and  on  Monday  morning  completed  the  contract  at  $3.75  per  cwt.,  and 
at  once  shipped  them  to  Chicago.  Thirty  died  on  the  way;  twenty 
were  condemned  by  the  health  officer.  It  is  shown  beyond  all  ques- 
tion that  they  all  had  the  Texas  fever. 

The  court,  by  the  first  instruction  given  at  the  request  of  the  plain- 
tiff, told  the  jury  that  if  "plaintiff  made  no  representations  to  defend- 
ant' as  to  the  health  or  condition  of  said  cattle  to  influence  defendant 
to  believe  said  .cattle  were  sound  or  in  healthy  condition,  but,  on  the 

«  For  (liscus.sion  of  priiKiplcs,  .see  Clark  oii  Contracts  ("Jd  Kd.)  §§  l.'i'J,  140. 


188  EEALITY   OF  CONSENT 

contrary,  defendant  bought  said  cattle  on  actual  view  of  the  same, 
and  relying  on  his  own  judgment  as  to  their  health  and  condition, 
then  the  jury  will  find  for  the  plaintiff;  *  ♦  *  and,  if  the  cattle 
were  bought  by  the  defendant  in  the  manner  above  stated  it  makes  no 
difference  whether  said  cattle,  or  any  of  them,  were,  at  the  time  of 
said  sale,  aft'ected  with  Texas  fever  or  other  disease,  or  whether  plain- 
tiff did  or  did  not  know  of  their  being  so  diseased,  as,  under  such  cir- 
cumstances, he  would  buy  at  his  own  risk  and  peril." 

Caveat  emptor  is  the  general  rule  of  th'e  common  law.  If  defects  in 
the  property  sold  are  patent,  and  might  be  discovered  by  the  exercise 
of  ordinary  attention,  and  the  buyer  has  an  opportunity  to  inspect  the 
property,  the  law  does  not  require  the  vendor  to  point  out  defects. 
But  there  are  cases  where  it  becomes  the  duty  of  the  seller  to  point 
out  and  disclose  latent  defects.  Parsons  says  the  rule  seems  to  be  that 
a  concealment  or  misrepresentation  as  to  extrinsic  facts  which  affect 
the  market  value  of  the  thing  sold,  is  not  fraudulent,  while  the  same 
concealment  of  defects  in  the  articles  themselves  would  be  fraudulent. 
2  Pars.  Cont.  (6th  Ed.)  775.  When  an  article  is  sold  for  a  particular 
purpose,  the  suppression  of  a  fact  by  the  vendor,  which  fact  makes 
the  article  unfit  for  the  purposes  for  which  it  was  solci,  is  a  deceit ; 
and,  as  a  general  rule,  a  material  latent  defect  must  be  disclosed  when 
the  article  is  offered  for  sale,  or  the  sale  will  be  avoided.  1  Whart. 
Cont.  §  248.  The  sale  of  animals  which  the  seller  knows,  but  the  pur- 
chaser does  not,  have  a  contagious  disease,  should  be  regarded  as  a 
fraud,  when  the  fact  of  the  disease  is  not  disclosed.  Cooley,  Torts, 
481.  Kerr  says :  "Defects,  however,  which  are  latent,  or  circum- 
stances materially  affecting  the  subject-matter  of  a  sale,  of  which  the 
purchaser  has  no  means,  or  at  least  has  no  equal  means,  of  knowledge, 
must,  if  known  to  the  seller,  be  disclosed."  Kerr,  Fraud  &  M.  (Ed. 
by  Bump,)   101. 

In  Cardwell  v.  McClelland,  3  Sneed  (Tenn.)  150,  the  action  was 
for  fraud  in  the  sale  of  an  unsound  horse.  The  court  had  instructed 
that  if  the  buyer  relies  upon  his  own  judgment  and  observations,  and 
the  seller  makes  no  representations  that  are  untrue,  or  says  nothing, 
the  buyer, takes  the  property  at  his  own  risk.  This  instruction  was 
hyfild  to  be  erroneous,  the  court  saying,  if  the  seller  knows  of  a  latent 
defect  in  the  property  that  could  not  be  discovered  by  a  man  of  ordi- 
nary observation,  he  is  bound  to  disclose  it.  In  Jeffrey  v.  Bigelow,  13 
Wend.  (N.  Y.)  518,  28  Am.  Dec.  476,  the  defendants,  through  their 
agent,  sold  a  flock  of  sheep  to  the  plaintiff.  Soon  after  the  sale  a 
disease  known  as  the  "scab"  made  its  appearance  among  the  sheep. 
It  was  in  substance  said,  had  the  defendants  made  the  sale  in  person, 
and  known  the  sheep  were  diseased,  it  would  have  been  their  duty 
to  have  informed  the  purchaser;  and  the  defendants  were  held  liable 
for  the  deceit.  In  the  case  of  McAdams  v.  Gates,  24  Mo.  223,  the 
plaintiff  made  an  exchange  or  swap  for  a  filly,  unsound  from  the  loss 
of  her  teeth.    The  court,  after  a  careful  review  of  the  authorities  as 


FRAUD  189 

they  then  stood,  announced  this  conclusion :  "If  the  defect  complained 
of  in  the  present  case  was  unknown  to  the  plaintiff,  and  of  such  a 
character  that  he  would  not  have  made  the  exchange  had  he  known 
of  it,  and  was  a  latent  defect  such  as  would  have  ordinarily  escaped 
the  observation  of  men  engaged  in  buying  horses,  and  the  defendant, 
knowing  this,  allowed  the  plaintiff  to  exchange  without  communicat- 
ing the  defect,  he  was  guilty  of  a  fraudulent  concealment,  and  must 
answer  for  it."  This  case  was  followed,  and  the  principle  reasserted, 
in  Barron  v.  Alexander,  27  Mo.  530.  Hill  v.  Balls,  2  Hurl.  &  N.  299, 
seems  to  teach  a  different  doctrine;  but  the  cases  in  this  court,  sup- 
ported as  they  are,  must  be  taken  as  the  established  law  of  this  state. 

There  is  no  claim  in  this  case  that  defendant  knew  these  cattle  were 
diseased.  It  seems  to  be  conceded  on  all  hands  that  Texas  fever  is  a 
disease  not  easily  detected,  except  by  those  having  had  experience  with 
it.  The  cattle  were  sold  to  the  defendant  at  a  sound  price.  If,  there- 
fore, plaintiff  knew  they  had  the  Texas  fever,  or  any  other  disease 
materially  affecting  their  value  upon  the  market,  and  did  not  disclose 
the  same  to  the  defendant,  he  was  guilty  of  fraudulent  concealment  of 
a  latent  defect.  It  is  not  necessary  to  this  defense  that  there  should 
be  any  warranty  or  representations  as  to  health  or  condition  of  the 
cattle.  Indeed,  so  far  as  this  case  is  concerned,  if  the  cattle  had  been 
pronounced  by  some  of  the  cattle-men  to  have  the  Texas  fever,  and, 
after  knowledge  of  that  report  came  to  plaintiff,  some  of  them  to  his 
knowledge  died  from  sickness,  then  he  should  have  disclosed  these 
facts  to  the  defendant.  They  were  circumstances  materially  affecting 
the  value  of  the  cattle  for  the  purposes  for  which  they  were  bought,  or 
for  any  other  purpose,  and  of  which  defendant,  on  all  the  evidence, 
had  no  equal  means  of  knowledge.  To  withhold  these  circumstances 
was  a  deceit,  in  the  absence  of  proof  that  defendant  possessed  such 
information. 

It  follows  that  the  first  instruction  is  radically  wrong,  and  that  the 
second  given  at  the  request  of  the  plaintiff  is  equally  vicious.  The 
judgment  is  reversed,  and  the  cause  remanded. 


2.  Character  of  Ri; presentation — Opinion 


GORDON  V.  PARMELEE  et  al. 
(Ruprome  .Tiidlcial  Court  of  Massachusetts,  1861.     2  Allen,  212.) 

Two  actions  of  contract,  tried  .-ind  argued  together,  on  i^romissory 
notes  given  by  the  defendants  in  payment  for  a  farm  and  a  dctachcfl 
piece  of  woodland. 


190  BEAUTY   OF   CONSENT 

At  the  trial  in  the  superior  court,  before  Rockwell,  J.,  it  appeared 
that  the  bargain  for  the  land  was  made  upon  the  premises,  and  that 
the  defendants  had  viewed  the  same  with  reference  to  the  purchase,  and 
passed  over  the  wood  lot  at  several  times  before  the  purchase,  in  dif- 
ferent directions. 

The  defendants  offered  to  show  that  the  treaty  for  the  purchase  \yas 
made  when  the  land  was  covered  with  snow,  and  that  the  plaintiffs 
falsely  represented  that  the  farm  was  of  a  soil,  and  a  capacity  for 
productiveness  and  the  keeping  of  stock,  greatly  superior  to  what  it 
was  in  fact;  and  that  they  had  no  means  of  judging  of  the  same  ex- 
cept from  the  representations  of  the  plaintiffs,  on  which  they  relied, 
and  were  thereby  induced  to  make  the  purchase ;  but  the  evidence  was 
excluded.  They  also  offered  to  show  that  the  wood  lo.t  was  so  rough 
and  uneven  that  its  actual  extent  could  not  be  seen  from  any  point, 
andl  that  the  plaintiffs  falsely  pointed  out  boundaries  as  the  true  ones 
which  included  lands  of  adjoining  owners,  and  falsely  represented  that 
a  portion  thereof  lying  under  a  ledge,  and  so  situated  that  no  judg- 
ment as  to  its  quantity  approaching  correctness  could  be  formed  by 
inspection,  contained  fifty  acres,  knowing  that  in  fact  it  only  contained 
twenty-eight  acres. . 

The  defendants  claimed  a  right  to  recoup  in  damages  for  all  these 
false  representations ;  but  the  court  ruled  that  they  could  recoup  only 
for  the  value  of  the  land  lying  between  the  boundaries  pointed  out  and 
the  true  bounds,  and  not  for  false  representations  as  to  the  number  of 
acres,  and  if  no  false  representations  were  made  as  to  the  boundaries, 
no  deduction  should  be  made  from  the  notes. 

The  plaintiffs  offered  in  evidence  the  declaration  in  an  action  brought 
by  the  defendant  Parmelee  against  the  plaintiffs,  to  recover  damages 
for  certain  specified  false  representations  alleged  to  have  been  made  by 
them  in  selling  this  land,  and  afterwards  discontinued,  for  the  purpose 
of  showing  that  the  claim  then  made  by  Parmelee  was  less  than  the 
claim  now  set  up  by  him.  This  was  objected  to,  unless  it  should  also 
be  shown  that  Parmelee  dictated  or  had  knowledge  of  the  precise  alle- 
gations contained  in  the  declaration;  but  the  court  allowed  the  evi- 
dence to  be  introduced. 

The  jury  returned  a  verdict  for  the  plaintiffs,  and  the  defendants  al- 
leged exceptions. 

BiGELOw,  C.  J.  The  alleged  false  statements  concerning  the  produc- 
tiveness of  the  land  and  its  capacity  to  furnish  support  for  cattle  con- 
stituted no  defence  to  the  notes.  They  fall  within  that  class  of  affirma- 
tions which,  although  known  by  the  party  making  them  to  be  false, 
do  not,  as  between  vendor  and  vendee,  aft'ord  any  ground  for  a  claim 
of  damages  either  in  an  action  on  the  case  for  deceit  or  by  way  of  re- 
coupment in  a  suit  to  recover  the  purchase  money.  They  come  within 
the  principle  embodied  in  the  maxim  of  the  civil  law,  "Simplex  com- 
mendatio  non  obligat."  Assertions  concerning  the  value  of  property 
which  is  the  subject  of  a  contract  of  sale,  or  in  regard  to  its  qualities 


FRAUD 


191 


and  characteristics,  are  the  usual  and  ordinary  means  adopted  by  sell- 
ers to  obtain  a  high  price,  and  are  always  understood  as  affording  to 
buyers  no  ground  for  omitting  to  make  inquiries  for  the  purpose  of 
ascertaining  the  real  condition  of  the  property. 

Affirmations  concerning  the  value  of  land,  or  its  adaptation  to  a  par- 
ticular mode  of  culture,  or  the  capacity  of  the  soil  to  produce  crops 
or  support  cattle,  are,  after  all,  only  expressions  of  opinion  or  estimates 
founded  on  judgment,  about  which  honest  men  might  well  differ  mate- 
rially. Although  they  might  turn  out  to  be  erroneous  or  false,  they 
furnish  no  evidence  of  any  fraudulent  intent.  They  relate  to  matters 
\vhich  are  not  peculiarly  within  the  knowledge  of  the  vendor,  and  do 
not  involve  any  inquiry  into  facts  which  third  persons  might  be  un- 
willing to  disclose.  They  are,  strictly  speaking,  gratis  dicta.  The  ven- 
dee cannot  safely  place  any  confidence  in  them ;  and  if  he  does,  he 
cannot  make  use  of  his  own  want  of  vigilance  and  care  in  omitting,  to 
ascertain  whether  they  were  true  or  false  as  the  basis  of  his  claim  for 
damages  in  reduction  of  the  amount  which  he  agreed  to  pay  for  the 
property. 

The  representations  concerning  the  quantity  of  land  which  formed 
the  subject  of  the  contract  come  within  the  same  principle.  The  ven- 
dors pointed  out  to  the  vendees  the  true  boundaries  of  the  land  which 
they  sold.  This  fact  is  established  by  the  verdict  of  the  jury  under  the 
instructions  which  were  given  at  the  trial.  The  defendants  had  there- 
fore the  means  of  ascertaining  the  precise  quantity  of  land  included 
within  the  boundaries.  They  omitted  to  measure  it,  or  to  cause  it  to 
be  surveyed.  By  the  use  of  ordinary  vigilance  and  attention,  they 
might  have  ascertained  that  the  statement  concerning  the  number  of 
acres,  on  which  they  placed  reliance,  was  false.  They  cannot  now  seek 
a  remedy  for  placing  confidence  in  affirmations  which,  at  the  time  they 
were  made,  they  had  the  means  and  opportunity  to  verify  or  disprove. 
Sugd  Vend.  6,  7 ;  Scott  v.  Hanson,  1  Sim.  13 ;  Medbury  v.  Watson, 
6  Mete.  246,  39  Am.  Dec.  726;   Brown  v.  Castles,  11  Cush.  348. 

The  declaration  in  the  former  suit  was  rightly  admitted.  It  was  in 
the  nature  of  an  admission  by  the  defendants  of  the  nature  and  amount 
of  damages  which  they  claimed  of  the  present  plaintiffs  in  reduction  of 
the  amount  due  on  the  notes.  The  declaration  was  not  a  mere  tech- 
nical statement  of  a  cause  of  action  by  an  attorney,  but  it  contained 
specific  averments  of  the  representations  which  the  defendants  alleged 
to  be  false,  and  which  must  have  been  derived  from  them.  It  \ya*? 
therefoie  the  statement  of  their  agent,  while  employed  and  acting 
within  the  scope  of  his  agency.    Currier  v.  Silloway,  1  Allen,  19. 

Exceptions  overruled. 


192  beauty  of  consent 

3.  Right  to  Rely  on  Statements 

STEVENS  V.  LUDLUM. 

(Supreme  Court  of  Minnesota,  1891.     46  armn.  160,  48  N.  W.  771,  13 
L.  R.  A.  270,  24  Am.   St.  Rep.  210.) 

Action  by  J.  W.  Stevens,  plaintiff,  against  John  Ludlum,  trading  as 
tiie  New  York  Pie  Company,  defendant,  upon  a  bill  of  exchange  drawn 
upon  the  company,  and  accepted  by  it  by  one  White,  as  manager.  De- 
fendant interposed  a  general  denial.  On  the  trial  plaintiff  offered  evi- 
dence tending  to  prove  that  defendant,  Ludlum,  had  stated  to  repre- 
sentatives of  Bradstreet's  and  Dun's  Commercial  Agencies,  who  had 
called  upon  him  in  their  official  capacity,  that  he  was  sole  proprietor  of 
the  New  York  Pie  Company,  and  the  owner  of  valuable  unincumbered 
real  estate;  that  this  information  was  communicated  by  the  agencies 
to  plaintiff,  one  of  their  subscribers,  who  in  good  faith  acted  thereon 
in  extending,  credit  to  the  company.  Defendant  admitted  making  the 
alleged  statements  to  the  commercial  agencies,  but  denied  having  ever 
had  any  connection  with  the  pie  company.  Judgment  was  ordered  for 
plaintiff'.    From  an  order  denying  a  new  trial  defendant  appeals. 

GiLFiLLAN,  C.  J.  The  facts  found  by  the  court  below  are  sufficient 
to  create  an  equitable  estoppel  against  defendant  as  to  the  ownership 
of  the  concern  doing  business  as  the  "New  York  Pie  Company."  To 
raise  such  an  estoppel,  it  is  not  necessary  that  the  representations  should 
have  been,  made  with  actual  fraudulent  intent.  If  he  knows,  or  ought 
to  know,  the  truth,  and  they  are  intentionally  made  under  such  circum- 
stances as  show  that  the  party  making  them  intended,  or  might  rea- 
sonably have  anticipated,  that  the  party  to  whom  they  are  made,  or  to 
whom  they  are  to  be  communicated,  will  rely  and  act  on  them  as  true, 
and  the  latter  has  so  relied  and  acted  on  them,  so  that  to  permit  the 
former  to  deny  their  truth  will  operate  as  a  fraud,  the  former  is,  in 
order  to  prevent  the  fraud,  estopped  to  deny  their  truth.  Coleman  v. 
Pearce,  26  Minn.  123,  1  N.  W.  846 ;  Beebe  v.  Wilkinson,  30  Minn.  548, 
16  N.  W.  450.  Nor  need  the  representations  be  made  directly  to  the 
party  acting  on  them.  It  is  enough  if  they  were  made  to  another,  and 
intended  or  expected  to  be  communicated  as  the  representations  of  the 
party  making  them  to  the  party  acting  on  them,  for  him  to  rely  and 
act  on.  "The  representation  may  be  intended  for  a  particular  individ- 
ual alone,  or  for  several,  or  for  the  public,  or  for  any  one  of  a  particu- 
lar class,  or  it  may  be  made  to  A.,  to  be  communicated  to  B.  Any  one 
so  intended  by  the  party  making  the  representation  will  be  entitled  to 
relief  or  redress  against  him,  by  acting  on  the  representation  to  his 
damage."    Bigelow,  Frauds,  445. 


FEAUD  193 

If  one  act  on  a  representation  not  made  to  nor  intended  for  him, 
he  will  do  so  at  his  own  risk.  An  instance  of  a  right  to  act  on  a  repre- 
sentation not  made  directly  to  the  person  acting  on  it,  but  intended  for 
him,  if  he  had  occasion  to  act  on  it,  is  furnished  by  Pence  v.  Arbuckle, 
22  Minn.  417.  The  representations  a  business  man  makes  to  a  bank 
or  commercial  agency,  especially  to  the  latter,  relating  to  his  business 
or  to  his  pecuniary  responsibility,  are  among  those  expected  to  be  com- 
municated to  others  for  them  to  act  on.  The  business  of  a  commercial 
agency  is  to  get  such  information  as  it  can  relative  to  the  business  and 
pecuniary  ability  of  business  men  and  business  concerns,  and  communi- 
cate it  to  such  of  its  patrons  as  may  have  occasion  to  apply  for  it. 
Any  one  making  representations  to  such  an  agency,  relating  to  his 
business  or  the  business  of  any  concern  with  which  he  is  connected, 
must  know,  must  be  held  to  intend,  that  whatever  he  so  represents 
will  be  communicated  by  the  agent  to  any  patron  who  may  have  occa- 
sion to  inquire.  His  representations  are  intended  as  much  for  the 
patrons  of  the  agency,  and  for  them  to  act  on,  as  for  the  agency  itself. 
When  the  representations  so  made  are  communicated,  as  those  of  the 
person  making  them,  to  a  patron  of  the  agency,  and  he  relies  and  acts 
on  them,  he  is  in  position  to  claim  an  estoppel. 

The  findings  of  fact  in  the  case  are  fully  sustained  by  the  evidence. 
Order  affirmed. 


4.  Knowledge  of  Falsity — Recklessness 


STIMSON  V.  HELPS  et  al. 
(Supreme  Court  of  Colorado,  1886.     9  Colo.  33,  10  Pac.  290.) 

The  complaint  sets  out  that  on  the  sixth  day  of  October,  1881,  Wil- 
liam Stimson  leased  to  the  defendants  in  error  the  S.  W.  V^  of  section 
21,  in  township  1,  range  70  west,  in  said  county,  for  the  period  of  four 
years  and  six  months,  for  the  purpose  of  mining  for  coal,  under  the 
conditions  of  said  lease;  that  they  had  no  knowledge  of  the  location 
of  the  boundary  lines  of  said  tract  at  the  time  of  the  leasing,  and  that 
they  so  informed  Stimson,  the  defendant  in  the  case;  that  they  re- 
quested Stimson  to  go  with  them  and  sliow  them  the  boundary  lines; 
that  the  defendant,  pretending  to  know  the  lines  bounding  said  land, 
and  their  exact  locality,  went  then  and  there  with  plaintiffs,  and  showed 
and  jiointed  out  to  them  what  he  said  was  the  leased  land,  and  the 
boundary  lines  thereof,  especially  the  north  aiul  south  lines  therc(if ; 
that  plaintiffs  not  then  knowing  the  lines  bounrling  said  land,  nor  the 
exact  location  thereof,  and  relying  upon  what  the  defendant  then  and 

THROCKM.CO.NT. — 13 


194  REALITY  OF  CONSENT 

there  pointed  out  to  them  as  the  leased  land,  and  the  lines  thereof,  then 
and  there  proceeded  to  work  on  the  land  pointed  out,  and  sank  shafts 
for  mining  coal  thereon,  and  made  sundry  improvements  thereon, — 
made  buildings,  laid  tracks,  etc. ;  that  all  the  said  work  was  done  and 
labor  performed  and  improvements  made  on  the  land  pointed  out  by 
defendant  to  plaintiffs  as  the  leased  land,  and  that  plaintiffs,  relying 
upon  the  statements  of  defendant  as  aforesaid,  and  not  knowing  other- 
wise, believed  they  were  performing  the  work,  and  making  all  the  im- 
provements on  the  land  tliey  had  so  leased,  which  they  did  by  direction 
of  the  defendant ;  that  while  they  were  working  on  the  said  land  Stim- 
son  was  frequently  present,  and  told  the  plaintiffs  they  were  on  his 
land,  and  received  royalty  from  ore  taken  therefrom ;  that  about  April 
10,  1882,  they  were  notified  to  quit  mining  on  said  ground  by  the  Mar- 
shall Coal  Mining  Company ;  that  the  land  belonged  to  said  company ; 
that  none  of  the  said  improvements  were  put  on  said  leased  land; 
and  that  they  were  compelled  to  quit  work  and  mining  thereon ;  that 
the  improvements  made  by  them  were  worth  $2,000;  that  Stimson 
falsely  represented  to  them  other  and  different  lines  than  the  true 
boundaries  of  said  premises,  and  showed  and  pointed  out  to  them  other 
and  different  lands  than  the  lands  leased  them,  and  thereby  deceived 
them,  and  damaged  them,  in  the  sum  of  $2,000.  Issue  joined,  and 
trial  to  the  court.  Motion  by  defendant's  counsel  for  judgment  on 
the  pleadings,  and  evidence  overruled.  Judgment  for  the  plaintiffs  in 
the  sum  of  $2,000,  and  costs. 

Elbert,  J,  The  law  holds  a  contracting  party  liable  as  for  fraud  on 
his  express  representations  concerning  facts  material  to  the  treaty,  the 
truth  of  which  he  assumes  to  know,  and  the  truth  of  which  is  not 
known  to  the  other  contracting  party,  where  the  representations  were 
false,  and  the  other  party,  relying  upon  them,  has  been  misled  to  his 
injury.  Upon  such  representations  so  made  the  contracting  party  to 
whom  they  are  made  has  a  right  to  rely,  nor  is  there  any  duty  of  in- 
vestigation cast  upon  him.  In  such  a  case  the  law  holds  a  party  bound 
to  know  the  truth  of  his  representations.  Bigelow,  Fraud,  57,  60,  63, 
67,  68,  87 ;  Kerr,  Fraud  &  M.  54  et  seq. ;  3  Wait,  Act.  &  Def .  436. 
This  is  the  law  of  this  case,  and,  on  the  evidence,  warranted  the  judg- 
ment of  the  court  below. 

The  objection  was  made  below,  and  is  renewed  here,  that  the  com- 
plaint does  not  state  sufficient  facts  to  constitute  a  cause  of  action. 
Two  points  are  made:  (1)  That  the  complaint  does  not  allege  that  the 
defendant  knew  the  representations  to  be  false;  (2)  that  it  does  not 
allege  intent  to  defraud. 

It  is  not  necessary,  in  order  to  constitute  a  fraud,  that  the  party 
who  makes  a  false  representation  should  know  it  to  be  false.  He 
who  makes  a  representation  as  of  his  own  knowledge,  not  knowing 
whether  it  be  true  or  false,  and  it  is  in  fact  untrue,  is  guilty  of  fraud 
as  much  as  if  he  knew  it  to  be  untrue.  In  such  a  case  he  acts  to  his 
own  knowledge  falsely,  and  the  law  imputes  a  fraudulent  intent.    Kerr, 


FEAUD  195 

Fraud  &  M.  54  et  seq.,  and  cases  cited ;  Bigelow,  Fraud,  63,  84,  453 ; 
3  Wait,  Act.  &  Def .  438  et  seq. ;  2  Estee,  Pr.  394  et  seq.  "Fraud"  is 
a  term  which  the  law  applies  to  certain  facts,  and  where,  upon  the  facts, 
the  law  adjudges  fraud,  it  is  not  essential  that  the  complaint  should, 
in  terms,  allege  it.  It  is  sufficient  if  the  facts  stated  amount  to  a  case 
of  fraud.  Kerr,  Fraud  &  M.  366  et  seq.,  and  cases  cited;  2  Estee, 
PI.  423.  The  complaint  in  this  case  states  a  substantial  cause  of  ac- 
tion, and  is  fully  supported  by  the  evidence. 

The  action  of  the  county  court  in  refusing  to  allow  the  appellant 
to  appeal  to  the  district  court  after  he  had  given  notice  of  an  appeal 
to  this  court,  and  time  had  been  given  in  which  to  perfect  it,  cannot  be 
assigned  as  error  on  this  record.  If  it  was  an  error,  it  was  error  not 
before,  but  after,  the  final  judgment  from  which  this  appeal  is  taken. 

The  judgment  of  the  court  below  is  affirmed. 


5.  Intention 


See  Stevens  v.  Ludlum,  supra,  p.  192. 


6.  Representation  must  Deceive 


<  JAMES  v.  HODSDEN. 

(Supreme  Court  of  Vermont,  1S74.    47  Vt  127.) 

REdFiELD,  J.''  This  action  is  to  recover  the  consideration  paid  for 
interest  in  a  certain  invention  or  right  to  procure  a  patent  for  an  im- 
proved knitting-needle.  The  theory  of  the  case  is  that  the  sale  was 
induced  by  fraud ;  that  the  property  is  worthless ;  and  that  the  con- 
sideration has  entirely  failed.     *     ♦     * 

The  charge  of  the  court,  "that  it  was  not  necessary  that  they  should 
find  that  the  plaintiff  relied  solely  on  the  representations,  but  it  was 
sufficient  if  they  found  the  representations  were  so  far  relied  on  by 
the  plaintiff  as  to  constitute  one  of  the  inducements  of  the  trade  in 
question,"  we  think  sound  and  reasonable.  Under  the  charge,  the  jury 
must  have  found  that  the  plaintiff  was  deceived  and  defrauded;  that 
he  was,  in  fact,  cajoled  into  a  purchase  of  a  palcnl-riglit  interest  of  no 

7  The  statement  of  facts  and  a  poiLioii  of  tbe  oitlnlou  are  omitted. 


196  REALITY   OF   CONSENT 

value,  and  giving  his  notes  for  a  large  sum,  by  the  false  assertions  and 
practices  of  the  defendant  and  his  conspirators.  It  is  often  said  in 
the  cases,  that  the  false  representations  must  have  been  such  that 
without  them  the  trade  would  not  have  been  made.  But  it  is  never 
possible  for  any  man,  in  the  aggregate  of  inducements  that  effected 
the  sale,  to  determine  whether  the  result  would  have  been  attained 
with  some  of  the  inducements  abated ;  nor  should  the  guilty  party 
seeking  the  benefit  of  a  sale  fraudulent  in  fact,  and  induced,  in  a 
measure,  by  his  fraud  and  falsehood,  be  permitted  to  allege  in  excuse 
that  the  innocent  party  might  have  made  the  purchase  if  he  had  prac- 
ticed less  deceit,  and  his  lies  had  been  less  flagrant.  If  he  resorts  to 
unlawful  means  and  accomplishes  a  fraudulent  purpose,  the  law  will 
not  stop  to  measure  the  force  of  such  inducements.  It  is  enough  that 
the  party  was  deceived  and  cheated,  and  the  defendant's  falsehood 
and  fraudulent  practices  contributed  to  that  end.  "The  misrepresen- 
tations must  be  in  something  material,  in  which  the  party  relies  and 
puts  confidence,  and  he  is  misled  and  cheated."  1  Story,  Eq.  §§  197, 
203.  If  a  party,  induced  by  the  several  false  and  fraudulent  decla- 
rations of  two  persons,  different  in  time  and  character,  purchases 
worthless  property,  it  would  not  do  to  say,  that  because  the  trade 
might  not  have  been  made  if  only  one  falsehood  had  been  uttered, 
and  the  purchase  not  wholly  induced  by  either,  therefore,  he  is  with- 
out remedy  or  redress.  If  a  fraud  is  accomplished,  and  the  unlawful 
acts  of  the  defendant  contributed  thereto,  he  is  answerable. 

The  fraudulent  acts  of  the  defendant  must,  indeed,  have  worked  an 
injury,  or  there  could  be  no  damages  and  no  recovery.  But  if  the 
wrong  has  been  done,  and  the  defendant  is  party  to  its  infliction,  the 
court  will  not  apportion  the  penalties  of  guilt  among  offenders,  nor 
divide  spoil  among  highwaymen.     ♦     ♦     *     Judgment  reversed. 


7.  Effect — Remedies 
>L  

ROWLEY  et  al.  v.  BIGELOW  et  al. 

(Supreme  Judicial  Court  of  Massachusetts,  1832.     12  Pick.  307,  23 
Am.  Dec.  607.) 

Trover  for  627  bushels  of  yellow  corn,  valued  at  55  cents  a  bushel. 

At  the  trial,  before  Wilde,  J.,  it  was  proved  by  the  plaintiffs,  that 
on  the  24th  of  May,  1830,  the  corn  belonged  to  them  and  was  in  their 
possession,  in  the  city  of  New  York,  on  board  the  sloop  Milan,  of 
which  S.  Dunning,  one  of  the  plaintiffs,  was  master,  and  that  it  was 
measured  and  delivered  on  board  the  schooner  Lion.  They  alleged 
that  one  William  N.  Martin,  a  merchant  there,  fraudulently  obtained 


FRAUD  197 

possession  of  it  by  pretending  to  purchase  it  for  cash;  and  it  was 
proved  that  on  the  25th  of  May  he  shipped  it  on  board  the  Lion,  con- 
signed to  the  defendants  at  Boston,  and  that  the  vessel  sailed  in  the 
afternoon  of  that  day  for  Boston.  On  the  26th,  Dunning,  having  in- 
effectually demanded  payment  for  the  corn,  at  Martin's  counting- 
house,  proceeded  to  Boston  to  reclaim  it.  He  reached  Boston  before 
the  arrival  of  the  Lion,  and  on  the  29th  gave  notice  to  the  defendants, 
to  whom  by  Martin's  orders  the  corn  was  to  be  delivered,  that  ^lar- 
tin  had  fraudulently  obtained  it  from  the  plaintiffs,  and  that  they  in- 
tended to  repossess  themselves  of  it.  On  the  30th,  when  the  Lion 
had  arrived  in  Boston  harbour.  Dunning  boarded  her  and  demanded 
of  the  master  possession  of  the  corn,  giving  him  notice  that  Martin 
had  obtained  it  fraudulently  from  the  plaintiff's.  The  master  notwith- 
standing delivered  it  to  the  defendants;  after  which  Dunning  de- 
manded it  of  them  and  tendered  them  any  freight  or  charges  which 
they  had  paid.  They  refused  to  deliver  the  corn,  and  thereupon  the 
suit  was  commenced. 

In  order  to  establish  the  fraud  on  the  part  of  Martin,  the  plaintiff's 
relied  on  the  depositions  of  C.  A.  Jackson  and  others,  merchants  in 
New  York,  who  testified  that  Martin  had  made  similar  purchases  of 
them  about  the  same  time,  and  under  circumstances  tending  to  show 
that  he  was  insolvent,  and  that  he  knew  it  and  had  no  reasonable  ex- 
pectation of  paying  for  the  merchandise  according  to  his  contract. 
The  defendants  objected  to  the  admission  of  these  depositions,  but  the 
judge  permitted  them  to  be  read  to  the  jury. 

The  defendants,  to  establish  their  right  to  hold  the  corn  against  the 
plaintiffs,  offered  in  evidence  a  bill  of  lading,  dated  May  17th,  1830, 
signed  by  the  master  of  the  Lion,  purporting  to  be  for  2000  bushels 
of  yellow  corn  shipped  by  Martin  and  consigned  to  the  defendants; 
also  an  invoice  corresponding  to  the  bill  of  lading  and  purporting  to 
be  for  2000  bushels  of  corn  consigned  to  the  defendants  for  sale  on 
the  shipper's  account,  and  signed  by  Martin;  also  a  letter  from  Mar- 
tin to  the  defendants  dated  May  17th  (to  which  the  bill  of  lading  and 
invoice  were  annexed)  advising  that  he  valued  on  them  in  favor  of 
Henry  Bennett  for  $1000,  at  ten  days'  sight,  and  directing  them,  if  he 
had  valued  too  much  on  this  shipment,  to  charge  it  to  some  previous 
one,  there  being  an  existing  account  between  Martin  and  the  defend- 
ants. And  it  was  proved  that  a  bill  drawn  accordingly  by  Martin, 
was  accepted  by  the  defendants  on  the  20th  of  May  and  paid  by  them 
at  maturity. 

There  was  no  evidence  that  the  defendants  had  any  knowledge  of 
the  fraudulent  conduct  of  Martin,  but  it  appeared  that  they  received 
the  bill  of  lading  and  invoice  and  accepted  the  draft  in  the  usual 
course  of  business. 

Upon  this  evidence  the  judge  ruled,  that  the  defendants  had  a  good 
title  to  the  property  notwithstanding  the  fraudulent  conduct  of  Mar- 


198  REALITY   OF   CONSENT 

tin,  and  notwithstanding  the  bill  of  lading  had  been  signed  before  the 
corn  was  shipped;  to  which  the  plaintiffs  excepted. 

A  verdict  was  taken  for  the  defendants  by  consent;  and  if  the 
whole  court  should  be  of  opinion  that  they  had  a  valid  title  to  the 
corn,  under  the  invoice  and  bill  of  lading,  judgment  was  to  be  ren- 
dered upon  the  verdict;  but  if  the  court  should  be  of  opinion  that  the 
ruling  was  wrong,  the  verdict  was  to  be  set  aside  and  the  defendants 
defaulted,  unless  the  court  should  also  be  of  opinion  that  the  deposi- 
tions above  mentioned  were  improperly  admitted ;  in  which  case  a  new 
trial  was  to  be  granted. 

Shaw,  C.  J.^  The  first  question  arising  in  this  cause  is,  whether 
the  depositions  of  Jackson  and  others,  under  the  circumstances,  ought 
to  have  been  admitted  as  competent.  These  were  generally  persons, 
of  whom  Martin  had  made  similar  purchases,  of  like  articles,  about 
the  same  time,  and  under  circumstances  tending  to  show  that  he  was 
insolvent  and  had  no  reasonable  expectation  of  paying  for  the  mer- 
chandise according  to  his  contract. 

The  objection  to  this  evidence  is  placed  on  two  grounds,  first,  that 
these  persons  having  similar  claims  of  their  own,  some  of  which  are 
pending  here,  they  have  an  interest  in  establishing  the  fraud  which 
they  are  called  to  prove;  and  secondly,  that  the  transactions  being 
res  inter  alios,  have  no  tendency  to  prove  the  fact  in  issue  in  this 
particular  case. 

But  in  our  opinion,  the  objection  cannot  be  sustained  upon  either 
ground.  As  to  the  first,  it  is  quite  clear,  that  the  verdict  and  judgment 
in  this  case  would  not  be  evidence  in  either  of  theirs ;  that  their  in- 
terest is  in  the  question  and  subject  matter  and  not  in  the  event  of 
the  suit,  and  therefore  that  the  objection,  such  as  it  is,  goes  to  the 
credit  and  not  to  the  competency  of  the  witnesses.  As  to  the  other 
objection,  we  think  this  evidence  has  a  direct  and  material  bearing 
upon  the  fact  in  issue.  It  tends  to  show,  that  at  the  time  this  ostensi- 
ble purchase  was  made,  Martin  was  insolvent,  that  he  knew  he  was  in- 
solvent, that  he  had  no  reasonable  ground  to  believe  that  he  could  pay 
the  cash  and  did  not  expect  or  intend  to  pay  the  cash  for  the  mer- 
chandise which  he  purchased,  and  so  that  he  obtained  the  goods,  by 
false  pretenses.  The  fact  of  insolvency,  of  his  knowledge  of  his  in- 
solvency, and  that  he  had  no  expectation  or  intention  of  paying  for 
the  corn  in  question,  is  a  material  fact  and  the  principal  fact  in  con- 
troversy on  which  this  case  rests,  and  is  material  to  the  issue.  The 
evidence  bears  upon  the  question  quo  animo,  the  intent,  the  fraud- 
•ilent  purpose. 

2.  It  is  next  contended  on  the  part  of  the  plaintiffs,  that  no  prop- 
vrrty  passed  by  the  fraudulent  purchase  of  Martin,  from  the  plain- 
tiffs to  him,  so  as  to  enable  him  to  make  a  title  to  the  defendants. 

The  evidence  clearly  shows  that  there  was  a  contract  of  sale  and 

»  A  portion  of  the  opinion  is  omitted 


FRAUD  199 

an  actual  delivery  of  the  goods,  by  their  being  placed  on  board  a  ves- 
sel, pursuant  to  his  order;  and  this  delivery  was  unconditional,  unless 
there  was  an  implied  condition  arising  from  the  usage  of  the  trade 
that  the  delivery  was  to  be  considered  revocable,  unless  the  corn 
should  be  paid  for,  pursuant  to  the  contract  and  to  such  usage.  This 
contract  and  delivery  were  sufficient  in  law  to  vest  the  property  ir 
Martin,  and  make  a  good  title,  if  not  tainted  by  fraud.  But  being 
tainted  by  fraud,  as  between  the  immediate  parties,  the  sale  was 
voidable,  and  the  vendors  might  avoid  it  and  reclaim  their  property. 
But  it  depended  upon  them  to  avoid  it  or  not,  at  their  election.  They 
might  treat  the  sale  as  a  nullity  and  reclaim  their  goods ;  or  affirm  it 
and  claim  the  price.  And  cases  may  be  imagined,  where  the  vendor, 
notwithstanding  such  fraud,  practised  on  him,  might,  in  consequence 
of  obtaining  security,  by  attachment  or  otherwise,  prefer  to  affirm 
the  sale.  The  consequence  therefore  is,  that  such  sale  is  voidable, 
but  not  absolutely  void.  The  consent  of  the  vendor  is  given  to  the 
transfer,  but  that  consent  being  induced  by  false  and  fraudulent  rep- 
resentations, it  is  contrary  to  justice  and  right,  that  the  vendor  should 
suffer  by  it,  or  that  the  fraudulent  purchaser  should  avail  himself  of 
it;  and  upon  this  ground,  and  for  the  benefit  of  the  vendor  alone,  the 
law  allows  him  to  avoid  it. 

The  dift'erence  between  the  case  of  property  thus  obtained,  and 
property  obtained  by  felony,  is  obvious.  In  the  latter  case,  no  right 
either  of  property  or  possession  is  acquired  and  the  felon  can  con- 
vey none. 

We  take  the  rule  to  be  well  settled,  that  where  there  is  a  contract 
of  sale,  and  an  actual  delivery  pursuant  to  it,  a  title  to  the  property 
passes,  but  voidable  and  defeasible  as  between  the  vendor  and  ven- 
dee, if  obtained  by  false  and  fraudulent  representations.  The  vendor 
therefore  can  reclaim  his  property  as  against  the  vendee,  or  any  other 
person  claiming  under  him  and  standing  upon  his  title,  but  not  against 
a  bona  fide  purchaser  without  notice  of  the  fraud.  The  ground  of 
exception  in  favor  of  the  latter  is,  that  he  purchased  of  one  having 
a  possession  under  a  contract  of  sale,  and  with  a  title  to  the  property, 
though  defeasible  and  voidable  on  the  ground  of  fraud ;  but  as  the 
second  purchaser  takes  without  fraud  and  without  notice  of  the  fraud 
of  the  first  purchaser,  he  takes  a  title  freed  from  the  taint  of  fraud. 
Parker  v.  Patrick,  5  Term  R.  175.  The  same  rule  holds  in  regard  to 
real  estate.  Somes  v.  Brewer,  2  Pick.  184,  13  Am.  Dec.  406.  ♦  ♦  * 
Judgment  on  the  verdict. 


200  EEALITY   OF   CONSENT 


IV.  Duress  • 


GALUSHA  et  ux.  v.  SHERMAN  et  al. 

(Supreme  Court  of  Wiscousin,  1900.     105  Wis.  2G3,  81  N.  W.  495,  47 

L.  R.  A.  417.) 

Action  by  D.  H.  Galusha  and  wife  against  Bradley  B.  Sherman 
and  others.     Judgment  for  plaintiffs.     Defendants  appeal.     Affirmed. 

Action  in  equity  to  set  aside  a  note  and  mortgage  on  the  ground 
of  duress.  The  issues  made  by  the  pleadings  sufficiently  appear  from 
the  facts  found  by  the  trial  court,  which  are  in  substance  as  follows : 

October  29,  1894,  Bradley  B.  Sherman,  claiming  to  have  been  in- 
jured by  eating  impure  meat,  believing  it  to  be  wholesome,  which  was 
furnished  to  him  for  food  by  D.  H.  Galusha  with  knowledge,  or  rea- 
sonable means  of  knowledge,  of  its  character,  commenced  an  action 
against  Galusha  to  recover  compensation  for  such  injury  to  the  amount 
of  $5,000.  A.  J.  Sutherland  was  Sherman's  attorney.  He  employed 
J.  H.  Langdon  to  serve  the  summons  and  complaint,  which  service  he 
performed  and  then  advised  Galusha  to  settle  the  claim,  accompany- 
ing such  advice  by  an  assertion  that  if  he  did  not  do  so  he  would  be 
prosecuted  criminally  and  sent  to  state's  prison  for  from  3  to  14 
years.  Langdon  induced  Galusha  to  accompany  him  to  Sutherland's 
office,  where  he  was  induced  to  niortgage  his  farm  for  $1,000  to  se- 
cure a  note  for  that  amount  payable  in  three  years,  with  interest  there- 
on at  the  rate  of  8  per  cent,  per  annum,  in  settlement  of  the  contro- 
versy. Sherman  assigned  the  note  and  mortgage  to  Sutherland  and 
the  latter  assigned  the  same  to  H.  V.  ^callon,  both  assignments  being 
recorded  November  5,  1894. 

Galusha  was  a  man  of  little  education  and  experience,  of  a  nervous 
temperament  and  easily  frightened.  The  fact  that  a  claim  was  made 
against  him  for  more  than  he  was  worth,  accompanied  by  threats  of 
imprisonment  for  a  long  term  of  years  if  he  did  not  settle  it,  de- 
prived him  of  his  freedom  of  will,  and  while  he  was  in  that  condition 
the  note  and  mortgage  were  procured.  Such  note  and  mortgage  were 
given  without  consideration.  The  plaintiff  Henrietta  Galusha  signed 
the  note  and  mortgage  in  the  absence  of  her  husband,  and  in  such  a 
state  of  fear  and  excitement,  caused  by  threats  made  to  her,  that  it 
was  not  her  voluntary  act.  The  mortgaged  property  was  worth  $3,- 
000.  Defendant  Scallon  is  not  the  bona  fide  purchaser  of  the  note 
and  mortgage.  On  such  facts  judgment  was  awarded  to  plaintiffs, 
declaring  the  note  and  mortgage  null  and  void  and  requiring  them  to 
be  surrendered  for  cancellation,   and   for   costs  against   defendants-. 

9  Fcr  discussion  of  princiiJles,  see  Clark  on  Contracts  (2d  Ed.)  §§  142-144. 


DUEESS  201 

There  was  evidence  tending  to  prove  that  at  Sutherland's  office  Ga- 
lusha  was  locked  in  a  room  with  Sutherland,  and  there  again  threat- 
ened with  arrest  and  imprisonment  for  from  3  to  14  years  if  he  did 
not  settle,  and  that  such  threats  were  accompanied  with  such  dem- 
onstrations on  the  part  of  Sutherland  as  to  greatly  distract  Galusha 
and  put  him  in  fear  of  personal  violence. 

MarshalIv,  J.^"  *  *  *  The  trial  court  found  that  when  the 
note  and  mortgage  were  executed,  Galusha  was  not  in  the  exercise  of 
his  free  will,  but  was  under  the  control  of  the  will  of  Langdon  and 
Sutherland,  and  that  he  was  deprived  of  his  own  will  power  by  the 
wrongful  acts  of  the  two  persons  named.  That  finding  was,  in  the 
main,  based  on  the  circumstance  that  a  complaint  had  been  served  upon 
Galusha,  claiming  damages  to  an  amount  sufficiently  large,  if  estab- 
lished to  its  full  extent,  to  absorb  his  entire  property,  and,  upon  dis- 
puted evidence  that  Langdon,  who  served  the  papers,  urged  him  to 
visit  Sutherland,  the  attorney  for  Sherman,  and  settle  the  contro- 
versy, stating  that  if  he  did  not  do  so  he  would  be  arrested  on  a  crim- 
inal warrant  and  sent  to  state's  prison;  that  through  Langdon's  in- 
fluence, and  accompanied  by  him,  respondent  went  to  Sutherland's  of- 
fice; that  he  was  there  locked  in  a  room  with  Sutherland,  or  with 
Sutherland  and  Langdon,  and  then  threatened  again  with  arrest  and 
imprisonment  for  from  3  to  14  years  unless  he  immediately  settled 
the  suit  by  paying  $1,000  or  securing  the  payment  of  such  sum;  that 
such  threats  were  accompanied  by  profanity  on  the  part  of  Suth- 
erland and  by  such  demonstrations  as  to  produce  a  belief  in  the  mind 
of  respondent  that  he  was  in  danger  of  personal  violence;  that  un- 
der such  circumstances  respondent  submitted  to  Sutherland's  demand 
and  executed  the  papers  in  controversy,  and  also  signed  a  commu- 
nication to  his  wife  directing  her  to  sign,  and  gave  such  communi- 
cation to  Sutherland  to  enable  him  to  secure  her  signature  in  the 
absence  of  her  husband. 

Appellants'  attorneys  contend  that,  assuming  that  the  evidence  on 
the  part  of  respondent  proves  all  that  it  tends  to  prove,  the  wrongful 
acts  were  not  sufficient  to  constitute  duress,  hence  not  sufficient  to 
warrant  the  finding  that  respondent  was  deprived  of  the  free  exercise 
of  his  will.  In  support  of  that,  many  suggestions  are  made  and  au- 
thorities cited  which  seem  to  call  for  a  brief  consideration  of  the  law 
of  duress  as  understood  by  this  court.  It  is  a  branch  of  the  law  that, 
in  the  process  of  development  from  the  rigorous  and  harsh  rules  of 
the  ancient  common  law,  has  been  so  softened  by  the  more  humane 
principles  of  the  civil  law,  and  of  equity,  that  the  teachings  of  the 
older  writers  on  the  suljject,  standing  alone,  are  not  proper  guides. 
The  change  from  the  ancient  doctrine  has  been  much  greater  in  some 
jurisdictions  than  in  others.  There  are  many  adjudications  based  on 
citations  of  authorities  not  in  themselves  harmonious,  and  many  statc- 

10  A  portion  of  Ibo  (tijliiion  Is  omitted. 


202  REALITY  OF  CONSENT 

ments  in  legal  opinions  based  on  the  ancient  theory  of  duress,  which 
together  create  much  confusion  on  the  subject,  not  only  as  it  is  treated 
by  text  writers,  but  by  judges  in  legal  opinions. 

Anciently,  duress  in  law  by  putting  in  fear  could  exist  only  where 
there  was  such  a  threat  of  danger  to  the  object  of  it  as  was  deemed 
sufficient  to  deprive  a  constant  or  courageous  man  of  his  free  will, 
and  the  circumstances  requisite  to  that  condition  were  distinctly  fixed 
by  law;  that  is  to  say,  the  resisting  power  which  every  person  was 
bound  to  exercise  for  his  own  protection  was  measured,  not  by  the 
standard  of  the  individual  affected,  but  by  the  standard  of  a  man  of 
courage;  and  those  things  which  could  overcome  a  person,  assuming 
that  he  was  a  prudent  and  constant  man,  were  not  left  to  be  deter- 
mined as  facts  in  the  particular  case,  but  were  a  part  of  the  law 
itself.  Co.  Litt.  253.  Said  Sir  William  Blackstone  (volume  1,  p. 
131)  :  "Whatever  is  done  by  a  man  to  save  either  life  or  member,  is 
looked  upon  as  done  upon  the  highest  necessity  and  compulsion. 
Therefore,  if  a  man  through  fear  of  death  or  mayhem,  is  prevailed 
upon  to  execute  a  deed  or  do  any  other  legal  act,  these,  though  accom- 
panied by  all  the  other  requisite  solemnities,  may  be  afterwards  avoided, 
if  forced  upon  him  by  a  well-grounded  apprehension  of  losing  his  life, 
or  even  his  limbs,  in  case  of  his  noncompliance."  "The  constraint  a 
man  is  under  in  these  circumstances  is  called  in  law  'duress.' "  ^  "A 
fear  of  battery  or  being  beaten,  though  never  so  well  grounded,  is  no 
duress,  neither  is  the  fear  of  having  one's  house  burned,  or  one's  goods 
taken  away  and  destroyed,  because  in  these  cases,  should  the  threat 
be  performed,  a  man  may  have  satisfaction  by  recovering  equivalent 
damages.  But  no  suitable  atonement  can  be  made  for  the  loss  of  life 
or  limb." 

Duress  of  imprisonment  existed,  by  the  old  rule,  only  where  there 
was  actual,  illegal  restraint  of  liberty.  The  doctrine  was :  "If  a  man 
be  imprisoned  by  order  of  law,  the  plaintiff  may  take  a  feoffment  of 
him,  or  a  bond  for  his  satisfaction,  and  for  the  deliverance  of  the  de- 
fendant, notwithstanding  that  imprisonment ;  for  this  is  not  by  duress 
of  imprisonment,  because  he  was  in  prison  by  course  of  law,  for  it  is 
not  accounted  in  law  duress  of  imprisonment,  but  where  either  the 
imprisonment,  or  the  duress  that  is  offered  in  prison,  or  at  large,  is 
tortious  and  unlawful."  2  Bac.  Abr.  p.  771.  Thus  it  will  be  seen 
that,  in  the  early  days  of  the  common  law,  duress,  strictly  so  called, 
was  matter  of  law.  It  was  pleadable  as  a  defense  or  as  material  to  a 
cause  of  action,  by  alleging  the  existence  of  specific  circumstances  le- 
gally sufficient  to  constitute  duress,  and  was  established  prima  facie  by 
proving  the  truth  of  such  allegations.  The  effect  of  the  facts  so  es- 
tablished was  determinable  as  an  inference  of  law,  not  of  fact.  Op- 
pression of  one  person  by  another,  causing  such  person  to  surren- 
der something  of  value  or  some  advantage  to  such  other,  not  amount- 
ing to  duress  within  the  rigorous  rules  of  law,  regardless  of  whether 
the  oppression  actually  deprived  the  oppressed  party  of  the  exercise 


DURESS  203 

of  his  free  will,  was  remediless  except  by  an  appeal  to  a  court  of 
equity,  where  a  remedy  was  obtainable  on  the  ground  of  unlawful 
compulsion.     Id.  772. 

It  is  interesting  to  follow  the  development  of  the  law  from  the  early 
period  mentioned.  To  do  so  in  this  opinion  would  draw  it  out  to  a 
far  greater  length  than  is  advisable;  but  we  will  proceed  sufficiently 
to  show  the  conflict  in  authorities  on  the  subject,  what  has  led  to  it, 
the  correct  doctrine  at  the  present  tim^,  and  the  unsoundness  of  the 
contentions  of  appellants'  counsel  as  to  the  law  applicable  to  this  case 
when  tested  by  such  doctrine.  That  seems  to  be  necessary  in  order 
to  show  that  the  theories,  advanced  by  appellants'  counsel,  to  support 
the  claim  that  the  finding  as  regards  respondent  suffering  from  wrong- 
ful deprivation  of  his  will  power  at  the  time  he  made  the  papers  in 
controversy  is  not  warranted  by  the  evidence,  are  unsound.  Those 
theories  are:  (1)  Oppression  does  not  constitute  duress  unless  suf- 
ficient to  overcome  the  will  of  a  person  of  ordinary  courage;  (2)  a 
threat  to  arrest  a  person  for  an  offense  of  which  he  is  not  guilty  does 
not  constitute  duress;  (3)  a  threat  to  arrest  a  person  on  a  charge  that 
does  not  constitute  a  criminal  offense  does  not  constitute  duress.  All 
of  such  theories  have  some  support  in,  but  all  are  out  of  harmony  with, 
the  real  foundation  principle  of  duress,  which  is  that  it  is  the  condi- 
tion of  the  mind  of  the  wronged  person  at  the  time  of  the  act  sought 
to  be  avoided,  not  the  means  by  which  such  condition  was  produced. 
Such  theories  are  also  out  of  harmony  with  the  theory  upon  which 
duress  of  a  contracting  party  renders  the  contract  voidable  as  to  him, 
which  is  that  the  free  meeting  and  blending  of  the  minds  of  contract- 
ing parties  are  requisite  to  a  binding  contract. 

Early  in  the  development  of  the  law,  the  legal  standard  of  resistance 
that  a  person  was  bound  to  exercise  for  his  own  protection  was 
changed  from  that  of  a  constant  or  courageous  man  to  that  of  a  person 
of  ordinary  firmness.  That  will  be  found  by  reference  to  some  of 
the  earlier  editions  of  Chitty  on  Contracts.  See  1  Chit.  Cont.  (11th 
Ed.)  p.  272;  2  Greenl.  Ev.  301.  But  the  ancient  theory  that  duress 
was  a  matter  of  law  to  be  determined  prima  facie  by  the  existence  or 
nonexistence  of  some  circumstance  deemed  in  law  sufficient  to  deprive 
the  alleged  wronged  person  of  freedom  of  will  power,  was  adhered 
to  generally,  the  standard  of  resisting  power,  however,  being  changed 
so  that  circumstances  less  dangerous  to  personal  li])erty  or  safety 
than  actual  deprivation  of  liberty  or  imminent  danger  of  loss  of 
life  or  limb,  came  to  be  considered  sufficient  in  law  to  overcome  such 
power.  The  oppressive  acts,  though,  were  still  referred  to  as  duress, 
instead  of  the  actual  effect  of  such  acts  upon  the  will  power  of  the  al- 
leged wronged  person.  It  is  now  slated,  ofteucr  than  otherwise,  in 
judicial  opinions,  that  in  determining  whether  there  was  or  was  not 
duress  in  a  given  case,  the  evidence  must  be  considered,  having  re- 
gard to  the  assumption  that  the  alleged  oppressed  person  was  a  per- 
son of  ordinary  courage.     The  learned  counsel   for  appellants  have 


204  REALITY   OF   CONSENT 

referred  to  some  such  authorities  to  support  their  claim  that  the  find- 
ing under  discussion  is  contrary  to  law,  in  that  the  threats  made  to 
respondent,  assuming  his  evidence  to  be  true,  were  not  sufficient  to  de- 
prive a  person  of  ordinary  firmness  of  his  free  will  power.  From 
that  it  is  argued  that  the  finding  is  unwarranted. 

That  one  should  be  led  astray  on  the  question  of  there  being  a  legal 
standard  of  resisting  power,  by  which  the  sufficiency  of  the  oppressive 
conduct  claimed  to  have  produced  duress  in  a  given  case  must  be 
tested,  is  most  natural  in  view  of  the  number  and  character  of  the  au- 
thorities to  that  effect.  As  we  have  seen,  the  text  of  Chitty  and  of 
Greenleaf  both  so  clearly  indicate.  In.  U.  S.  v.  Huckabee,  16  Wall. 
414,  21  Iv.  Ed.  457,  a  case  generally  cited  as  giving  a  very  clear  defini- 
tion of  duress  according  to  the  modern  doctrine  on  the  subject,  Mr. 
Justice  Clifford  said :  "Unlawful  duress  is  a  good  defense  to  a  con- 
tract if  it  includes  such  degree  of  constraint  or  danger,  either  actually 
inflicted  or  threatened  and  impending,  as  is  sufficient  in  severity  or 
apprehension  to  overcome  the  mind  and  will  of  a  person  of  ordinary 
firmness."  On  the  same  line,  Mr.  Justice  Colerick,  in  Hines  v.  Board, 
93  Ind.  266,  said,  citing  from  4  Wait,  Act.  &  Def.  p.  490:  "Mere 
threats  of  violence,  or  of  prosecution,  are  not  enough  to  constitute 
duress.  There  must  be  a  reasonable  ground  for  creating  an  appre- 
hension that  threats  will  be  carried  into  execution,  in  the  mind  of  a 
man  of  ordinary  firmness  and  courage,  and  must  operate  upon  him 
directly,  so  as  to  overcome  his  will." 

Similar  language  is  used  in  legal  opinions  of  courts  of  many  of  the 
states,  as  will  be  shown  by  reference  to  the  following:  Youngs  v. 
Simm,  41  111.  App.  28;  Harmon  v.  Harmon,  61  Me.  227,  14  Am. 
Rep.  556;  Morse  v.  Woodworth,  155  Mass.  233,  27  N.  E.  1010,  and 
29  N.  E.  525 ;  Higgins  v.  Brown,  78  Me.  473,  5  Atl.  269 ;  Wolfe  v. 
Marshal,  52  Mo.  167;  Burr  v.  Burton,  18  Ark.  214;  Flanigan  v.  City 
of  Minneapolis,  36  Minn.  406,  31  N.  W.  359;  Horton  v.  Bloedorn, 
37  Neb.  666,  56  N.  W.  321.  In  the  last  case  cited  the  following  in- 
struction to  the  jury  was  approved :  "The  threats,  if  any  were  in  fact 
made,  must  have  been  of  such  a  character  as  to  naturally  overcome 
the  mind  and  will  of  a  person  of  ordinary  firmness,  and  deprive  him, 
for  the  time  being,  of  the  power  of  mind  and  will  to  resist  the  demand 
by  the  person  making  such  threats."  Those  authorities  indicate  ad- 
herence to  the  doctrine  of  a  legal  standard  of  resistance  by  which  to 
test  the  alleged  wrongful  acts;  also  adherence,  generally,  to  the  old 
doctrine  of  the  legal  sufficiency  of  particular  threats  or  acts  to  pro- 
duce duress,  the  only  change  in  the  former  element,  from  the  ancient 
common  law,  being  the  substitution  of  resisting  power  of  a  person  of 
ordinary  firmness  for  that  of  a  prudent  and  constant  man;  and  the 
only  change  in  the  latter  element  being  the  addition  of  elements  of 
less  severity  than  actual  imprisonment  or  danger  of  loss  of  life  or 
limb,  as  being  sufficient  to  deprive  a  person,  of  the  legal  standard  of 
resisting  power,  of,  his  free  will,  leaving  the  only  question  of  fact  to  be 


DURESS  205 

determined  by  the  jury,  whether  the  will  power  of  the  oppressed 
person  was  in  fact  overcome  in  the  particular  case,  the  presumption, 
in  the  absence  of  evidence  to  the  contrary,  being  in  the  affirmative. 

It  will  be  noted  in  an  examination  of  the  cases  that  the  means  used 
to  overcome  the  person  threatened  are  uniformly  referred  to  as  the 
duress,  instead  of  the  condition  of  mind  produced  thereby.  In  U. 
S.  V.  Huckabee,  supra,  it  is  said,  "Decisions  of  high  authority  adopt 
the  liberal  rule  that  contracts  procured  by  threats  of  battery  to  the 
person,  or  of  distraint  of  property,  may  be  avoided  by  proof  of  such 
facts."  In  Harmon  v.  Harmon,  supra,  it  is  said  that  mere  threats 
of  criminal  prosecution  do  not  constitute  duress  without  threats  of 
immediate  imprisonment.  Similar  language  is  found  in  Hilborn  v. 
Bucknam,  78  Me.  485,  7  Atl.  272,  57  Am.  Rep.  816,  and  Thorn  v. 
Pinkham,  84  Me.  101,  24  Atl.  718,  30  Am.  St.  Rep.  335.  In  Knapp 
V.  Hyde,  60  Barb.  (N.  Y.)  80,  it  was  held,  following  the  old  common- 
law  doctrine,  that  in  order  to  avoid  an  act  on  the  ground  of  menace 
of  arrest  or  imprisonment,  it  must  appear  that  the  menace  was  of 
unlawful  imprisonment;  while  in  Insurance  Co.  v.  Kirkpatrick,  111 
Ala.  456,  20  South.  651,  it  is  said  that  the  guilt  or  innocence  of  the 
alleged  wronged  party,  or  the  lawfulness  or  unlawfulness  of  the 
threats,  are  inimaterial,  the  material  and  only  material  question  be- 
ing, was  the  threat  made  for  the  purpose  of  overcoming  the  will  of 
the  person  threatened,  and  did  it  have  that  effect,  and  was  the  con- 
tract thereby  obtained? 

Sufficient  has  been  said  to  show  the  conflict  that  exists  on  the  sub- 
ject under  discussion.  The  more  advanced  doctrine  is  that  stated  in 
the  Alabama  case  cited.  Under  it,  advantages  obtained  by  what  was 
considered  duress  by  old  common-law  rules,  or  such  rules  as  changed, 
in  respect  to  the  standard  of  resisting  power  which  the  threatened  per- 
son is  legally  bound  to  exercise  for  his  own  protection  or  be  remedi- 
less at  law  for  the  consequences,  and  in  respect  to  the  nature  of  the 
threats  deemed  legally  sufficient  to  overcome  a  person  of  the  legal 
standard  of  resisting  power,  and  also  advantages  wrongfully  obtained, 
though  not  by  duress,  in  law,  and  remediable  as  such,  but  remediable 
in  equity  upon  the  ground  of  unjust  compulsion,  are  now  practically 
in  one  class.  Duress,  in  its  broad  sense,  now  includes  all  instances 
where  a  condition  of  mind  of  a  person,  caused  by  fear  of  personal 
injury  or  loss  of  limb,  or  injury  to  such  person's  property,  wife,  child 
or  husband,  is  produced  by  the  wrongful  conduct  of  another,  rendering 
such  person  incompetent  to  contract  with  the  exercise  of  his  free  will 
power,  whether  formerly  relievable  at  law  on  the  ground  of  duress 
or  in  equity  on  the  ground  of  wrongful  compulsion. 

The  making  of  a  contract  requires  the  free  exercise  of  the  will 
power  of  the  contracting  parties,  and  tiie  free  meeting  and  blending 
of  their  minds.  In  the  absence  of  that,  the  essential  of  a  contract  is 
wanting;  and  if  such  absence  be  produced  by  the  wrongful  conduct 
of  one  party  to  the  transaction,  or  conduct  for  which  he  is  rcsponsil)lc. 


206  REALITY   OF  CONSENT 

whereby  the  other  party,  for  the  time  bemg,  through  fear,  is  bereft 
of  his  free  will  power,  for  the  purpose  of  obtaining  the  contract,  and 
it  is  thereby  obtained,  such  contract  may  be  avoided  on  the  ground  of 
duress.  There  is  no  legal  standard  of  resistance  which  a  party  so  cir- 
cumstanced must  exercise  at  his  peril  to  protect  himself.  The  question 
in  each  case  is,  was  the  alleged  injured  person,  by  being  put^  in  fear 
by  the  other  party  to  the  transaction  for  the  purpose  of  obtaining  an 
advantage  over  him,  deprived  of  the  free  exercise  of  his  will  power, 
and  was  such  advantage  thereby  obtained?  If  the  proposition  be  de- 
termined in  the  affirmative,  no  matter  what  the  nature  of  the  threat- 
ened injury  to  such  person,  or  his  property,  or  the  person  or  liberty 
of  his  wife  or  child,  the  advantage  thereby  obtained  cannot  be  retained. 
The  idea  is  that  what  constitutes  duress  is  wholly  a  matter  of  law  and 
is  simply  the  deprivation  by  one  person  of  the  will  power  of  another, 
by  putting  such  other  in  fear  for  the  purpose  of  obtaining,  by  that: 
means,  some  valuable  advantage  of  him.  The  means  by  which  that 
condition  of  mind  is  produced  are  matters  of  fact,  and  whether  such 
condition  was  in  fact  produced  is  usually  wholly  matter  of  fact,  though 
of  course  the  means  may  be  so  oppressive  as  to  render  the  result  an 
inference  of  law.  It  is  a  mistaken  idea  that  what  constitutes  duress 
is  different  in  case  of  an  aged  person  or  a  wife  or  child  than  in  case 
of  a  man  of  ordinary  firmness.  As  said  in  Wolff  v.  Bluhm,  95  Wis. 
257,  70  N.  W.  73,  60  Am.  St.  Rep.  115,  the  condition  of  mind  of  a 
person  produced  by  threats  of  some  kind,  rendering  him  incapable  of 
exercising  his  free  will,  is  what  constitutes  duress.  The  means  used 
to  produce  that  condition,  the  age,  sex  and  mental  characteristics  of 
the  alleged  injured  party,  are  all  evidentiary,  merely,  of  the  ultimate 
fact  in  issue,  of  whether  such  person  was  bereft  of  the  free  exercise 
of  his  will  power.  Obviously,  what  will  accomplish  such  result  cannot 
justly  be  tested  by  any  other  standard  than  that  of  the  particular  per- 
son acted  upon.  His  resisting  power,  under  all  the  circumstances  of 
the  situation,  not  any  arbitrary  standard,  is  to  be  considered  in  de- 
termining whether  there  was  duress.  The  more  modern  text  writers 
so  state  the  law  to  be. 

In  Bishop  on  Contracts  (719)  it  is  said,  in  substance,  that  the  prop- 
osition found  in  many  of  the  cases  that  the  threat  must  be  such  as 
would  excite  the  reasonable  apprehension  of  a  person  of  ordinary 
courage,  is  certainly  incorrect;  that  it  originated  in  the  failure  of 
the  old  writers  (referring  to  Coke  on  Littleton)  to  distinguish  be- 
tween the  mind  acted  upon  and  the  thing  menaced;  that  the  law  of 
contracts  considers  the  quality  of  the  contracting  mind,  and  there- 
fore holds  the  apparent,  not  real,  consent  of  the  subject  or  timid  per- 
son, or  person  of  inferior  intellect,  as  invalid  as  that  of  the  strongest 
and  most  independent  understanding,  though  the  latter  would  not  have 
been  enthralled  where  the  former  was.  In  the  last  revisions  of  Chitty 
on  Contracts,  brought  out  in  1890  and  1896  (page  199  of  the  latter), 
the  old  text  on  the  subject  under  discussion  was  changed  to  conform 


DURESS  207 

to  the  doctrine  as  stated  in  Bishop  on  Contracts.  A  comparison  of  it 
with  the  early  text  is  one  of  the  best  demonstrations  that  can  be 
given  of  the  great  change  that  has  taken  place  in  the  law  under  dis- 
cussion from  the  early  rules  on  the  subject.  The  following  is  the  new 
text :  "It  has  been  sometimes  said  that  in  order  to  avoid  a  contract 
entered  into  through  fear,  the  fear  must  be  such  as  would  impel  a  per- 
son of  ordinary  courage  to  yield  to  it.  I  do  not  think  this  an  accurate 
statement  of  the  law.  Whenever  from  natural  weakness  of  intellect, 
or  from  fear — whether  reasonably  entertained  or  not — either  party  is 
actually*  in  a  state  of  mental  incompetence  to  resist  pressure  improper- 
ly brought  to  bear,  there  is  no  more  consent  than  in  the  case  of  a  per- 
son of  stronger  intellect  and  more  robust  courage  yielding  to  a  more 
serious  danger.  The  difficulty  consists  not  in  an  uncertainty  of  the 
law  on  the  subject,  but  in  its  application  to  the  facts  of  each  individual 
case." 

In  Chitty's  work  on  Commercial  Law,  printed  in  1824,  it  is  said  that 
"fear,  which  is  sufficient  to  avoid  a  contract,  must  be  a  present  fear, 
occasioned  by  some  present  or  future  danger,  not  a  mere  suspicion  of 
the  approach  of  danger,  nor  such  an  apprehension  as  would  arise 
in  the  mind  of  a  weak  or  timorous  man,  but  such  as  would  alarm  a 
firm  man,  such  as  the  fear  of  death  or  of  bodily  torment;  that  the 
fear  of  battery,  which  may  be  slight,  will  not  amount  to  duress  as 
will  the  fear  of  mayhem  or  loss  of  life."  In  support  of  the  later  text 
of  Bishop  and  Chitty,  Jr.,  see  10  Am.  &  Eng.  Enc.  Law  (2d  Ed.)  341 ; 
Cribbs  V.  Sowle,  87  Mich.  340,  49  N.  W.  587,  24  Am.  St.  Rep.  166 ; 
Overstreet  v.  Dunlap,  56  111.  App.  486;  Parmentier  v.  Pater,  13  Or. 
121,  9  Pac.  59;  Earle  v.  Hosiery  Co.,  36  N.  J.  Eq.  192;  Jordan  v. 
Elliott,  12  Wkly.  Notes  Cas.  56;  Williams  v.  Bayley,  1  H.  L.  Cas. 
200;  Scott  v.  Sebright,  12  Prob.  Div.  21. 

From  the  foregoing  it  will  be  seen  that  the  true  doctrine  of  duress, 
at  the  present  day,  both  in  this  country  and  England,  is  that  a  contract 
obtained  by  so  oppressing  a  person  by  threats  regarding  his  personal 
safety  or  liberty,  or  that  of  his  property,  or  of  a  member  of  his  family, 
as  to  deprive  him  of  the  free  exercise  of  his  will  and  prevent  the  meet- 
ing of  minds  necessary  to  a  valid  contract,  may  be  avoided  on  the 
ground  of  duress,  whether  the  oppression  causing  the  incompetence  to 
contract  be  produced  by  what  was  deemed  duress  formerly,  and  re- 
lievable  at  law  as  such,  or  wrongful  compulsion  remediable  by  an 
appeal  to  a  court  of  equity.  The  law  no  longer  allows  a  pcr=on  to 
enjoy,  without  disturbance,  the  fruits  of  his  iniquity,  because  his  vic- 
tim was  not  a  person  of  ordinary  courage ;  and  no  longer  gauges  tiie 
acts  that  shall  be  held  legally  sufficient  to  produce  duress  by  any  ar- 
bitrary standard,  but  holds  him  who,  by  putting  another  in  fear,  shall 
have  produced  in  him  a  state  of  mental  incompetency  to  contract,  and 
then  takes  advantage  of  such  condition,  no  matter  by  what  means  such 
fear  be  caused,  liable  at  the  option  of  such  other  to  make  restitution 
to  him  of  everything  of  value  thereby  taken  from  him. 


208  REALITY   OF   CONSENT 

The  law  as  indicated,  though  not  discussed  at  any  great  length  in 
previous  adjudications  of  this  court,  has  always  been  the  ruling  prin- 
ciple of  its  decisions.  In  Brown  v.  Peck,  2  Wis.  261,  it  was  said  that 
if  menaces  are  used,  or  equivalent  acts  of  violence,  such  as  to  have  an 
undue  influence  upon  the  party  and  to  prevent  the  exercise  of  his  own 
free  will  in  executing  the  contract,  it  is  voidable.  True,  the  court  was 
there  speaking  of  the  power  of  a  court  of  equity  to  remedy  a  wrong, 
but  the  situation  calling  for  such  remedy  was,  as  the  court  said,  that 
there  was  no  contract  existing  between  the  parties  for  want  of  assent 
by  one  party  on  account  of  the  oppression  to  which  he  was  subjected 
on  behalf  of  the  other. 

In  Bank  v.  Kusworm,  91  Wis.  166,  64  N.  W.  843,  and  Wolff  v. 
Bluhm,  95  Wis.  257,  70  N.  W.  73,  60  Am.  St.  Rep.  115,  the  doctrine 
was  stated  in  effect  thus :  Where  one,  by  the  wrongful  act  of  another, 
is  put  in  fear  and  thereby  induced  to  make  a  contract  or  to  forego 
some  act  under  circumstances  which  deprive  him  of  the  exercise  of 
his  free  will,  duress  exists ;  the  wrongful  act  does  not  constitute  the 
duress,  but  the  condition  of  mindl  produced  thereby.  The  act  must 
be  of  such  a  nature  and  made  under  such  circumstances  as  to  constitute 
a  reasonable,  adequate  cause  to  control  the  mind  of  the  threatened  per- 
son, and  must  have  that  effect ;  and  the  act  sought  to  be  avoided  must 
have  been  performed  by  such  person  while  in  such  condition.  It  will 
be  noted  that  it  was  said,  the  cause  producing  incompetency  to  contract 
through  fear,  need  only  be  reasonably  sufficient  to  overcome  the  will 
power  of  the  particular  person  acted  upon.  That  it  may  be  more  or 
less  than  that  required  to  overcome  the  mind  of  a  person  of  ordinary 
firmness,  according  as  the  person  acted  upon  is  above  or  below  the  av- 
erage in  mental  ability  to  protect  himself  against  the  influence  of  fear, 
is  obvious. 

There  was  unnecessarily  added  to  a  correct  statement  of  the  law,  in 
Wolff  v.  Bluhm,  a  reference  to  the  doctrine  of  the  supreme  court  of 
Maine,  as  to  the  sufficiency  of  certain  circumstances  to  constitute  du- 
ress, not  in  harmony  with  the  law  as  stated  in  this  opinion.  An  arbi- 
trary rule,  that  a  threatened  lawful  arrest  and  imprisonment  implying, 
harsh  or  unreasonable  use  of  criminal  process,  and  where  no  warrant 
has  been  issued  and  there  is  no  danger  of  the  threat  being  immediately 
carried  out,  is  not  sufficient  to  produce  duress,  seems  unreasonable. 
Such,  however,  is  the  doctrine  of  the  supreme  court  of  Maine,  and 
the  cases  supporting  it  will  be  found  very  generally  cited  by  text  writers 
and  judges.  That  rule  goes  naturally  with  the  doctrine  that  every 
person,  without  regard  to  actual  mental  power,  is  bound  to  come  up 
to  the  standard  of  average  men  in  that  regard  or  suffer  the  conse- 
quences. 

We  have  now  reached  a  point  where  it  clearly  appears  that  the  con- 
tention of  counsel  for  appellants,  that  the  testimony  of  the  plaintiff, 
undisputed,  is  legally  insufficient  to  produce  duress,  cannot  be  sus- 
tained, and  it  remains  to  be  seen  whether  the  finding  that  duress  was 


DURESS  209 

in  fact  produced  by  the  conduct  of  Sutherland  and  his  confederate, 
Langdon,  is  contrary  to  the  clear  preponderance  of  the  evidence. 

Looking  at  the  testimony  of  the  several  witnesses,  as  printed  in  the 
record,  it  is  by  no  means  certain  but  that  the  evidence  preponderates 
to  the  side  of  the  appellants,  andl  that  no  clear  case  is  made  out  such 
as  is  required  to  impeach  a  transaction  for  fraud.  But  when  the  cir- 
cumstances disclosed  are  taken  into  consideration,  the  interest  which 
the  different  witnesses  had  in  the  result,  the  opportunity  that  each  had 
for  knowing,  the  facts  in  respect  to  which  he  testified,  and  everything 
appearing  that  aids  in  weighing  the  evidence  and  determining  where 
the  truth  lies,  doubt  is  produced  as  to  the  correctness  of  the  findings 
which  is  reasonably  resolved  in  their  favor  by  giving  due  weight  to 
those  things  which  were  available  to  the  trial  judge,  and  presumably 
were  considered  by  him,  that  could  not  be  made  a  part  of  the  record 

This  is  peculiarly  a  case  where  opportunity  to  see  the  witnesses  and 
observe  their  manner  while  testifying  is  of  great  importance  in  judicial 
search  after  truth.  That  the  learned  judge  who  made  the  findings 
studied  the  situation  with  the  light  that  such  opportunity  cast  upon  it 
cannot  be  doubted,  and  the  result  is  embodied  in  the  findings  which 
we  are  asked  to  reverse.  There  is  a  finding  that  respondent  is  a  very 
nervous  man  and  easily  subject  to  be  imposed  upon  in  the  manner  in 
which  it  is  claimed  he  was  wronged.  That  circumstance  was  of  im- 
portance in  the  case.  There  is  very  little  evidence  in  the  record  in  re- 
gard to  it,  but  it  is  obvious  that  a  personal  study  of  the  man  during 
the  trial,  by  one  skilled  in  such  matters,  could  hardly  have  failed  to 
reveal  the  truth,  without  any  direct  evidence  of  the  fact. 

Considering  respondent  as  a  man  of  average  firmness,  intelligence 
and  experience,  it  would  be  unreasonable  to  say  that  the  preposterous 
assertions  of  Langdon  and  Sutherland,  as  to  what  they  could  and 
would  do  with  him  in  the  event  of  his  not  settling  the  Sherman  claim, 
em.phasized  even  by  loud  and  vehement  expressions,  by  profanity  and 
gesticulations,  would  have  aflfected  him  otherwise  than  by  producing 
anger,  amusement  or  disgust;  but  a  view  of  respondent  and  study  of 
him  in  court  may  easily  have  satisfied  the  trial  court  that  he  was  a  man 
liable,  under  the  circumstances  in  which  he  was  placed,  to  be  deluded, 
and  to  regard  falsehood  as  truth  and  mere  shamming  as  serious  reality. 

The  record  shows  that  a  hard-working,  middle-aged  farmer,  not  of 
sufficient  intelligence  to  know  his  legal  rights,  was,  without  previous 
negotiations  for  a  settlement  of  an  existing  doubtful  claim,  sued  upon 
it  for  a  sum  perhaps  in  excess  of  his  entire  fortune,  the  papers  being 
served  by  a  shrewd  person  specially  employed  for  that  purpose,  instead 
of  by  an  officer ;  that  on  the  same  day  such  person  accompanied  the 
defendant  to  the  presence  of  the  plaintiff's  lawyer,  and  that  an  agree- 
ment was  there  obtained  from  such  defendant  to  pay,  in  settlement  of 
the  controversy,  an  amount  representing  a  large  portion  of  his  entire 
property, — probably  the  accumulation  of  many  years  of  labor, — and  tc 

TUEOCKM.CONT. — 14 


210  REALITY    OF   CONSENT 

secure  such  agreement  by  a  mortgage  upon  his  home.  The  transaction, 
of  itself,  is  unnatural  and  unexplainable  upon  any  reasonable  theory 
other  than  that  respondent  was  a  weak  man,  easily  influenced,  and  that 
considerable  pressure  was  put  upon  him  to  produce  the  result  accom- 
plished. The  probabilities  point  that  way  in  the  absence  of  evidence 
explaining  how  the  thing  was  brought  about. 

The  explanation  on  the  part  of  appellants  is  that  respondent  went 
to  Sutherland's  office  of  his  own  free  will  and  out  of  a  desire  for  an 
immediate  settlement  of  the  claim  on  the-  best  terms  possible,  and  that 
he  desired  the  presence  and  assistance  of  Langdon.  That  explanation 
does  not  strike  one  as  reasonable.  Why  should  respondent  desire,  ex- 
pect or  rely  on  help  from  the  agent  of  the  attorney  for  the  adverse 
party  in  making  a  settlement  ?  Why  did  he  not  go  to  some  neighbor, 
acquaintance  or  friend  or  some  lawyer  for  counsel  instead  of  relying, 
on  Langdon?  Those  questions  are  not  answerable  from  the  record 
except  by  respondent's  own  evidence  that  he  was  induced,  by  Lang- 
don's  threats,  to  believe  that  it  was  best  for  him  to  visit  Sutherland 
and  settle  immediately  in  order  to  avoid  arrest  and  imprisonment.  Why 
did  he  finally  settle  with  the  attorney  for  the  adverse  party  and  agree 
to  surrender,  in  satisfaction  of  the  claim  made  upon  him,  such  a  large 
proportion  of  his  property,  without  taking  time  for  reflection  or  mak- 
ing an  effort  to  obtain  counsel,  when  he  could  not  have  been  prejudiced 
by  waiting,  at  least  till  near  the  expiration  of  the  20  days  allowed  in 
which  to  answer  the  complaint,  before  making  a  settlement? 

Nothing  in  the  record  furnishes  an  answer  to  that,  except  the  evi- 
dence of  respondent' that  he.  was  threatened  with  arrest  and  imprison- 
ment if  he  did  not  submit  to  the  demand  for  a  speedy  settlement.  The 
very  fact  that  respondent  went  to  the  office  of  Sutherland  and  settled) 
a  claim  of  such  a  serious  nature  in  the  manner  in  which  the  settlement 
was  made,  without  an  effort  to  take  counsel  in  respect  to  it,  is  a  very 
strong  circumstance  tending  to  show  that  he  was  of  that  mental  make- 
up liable  to  be  controlled  and  moved  to  action,  to  his  disadvantage,  by 
fear. 

Looking  to  the  direct  evidence  of  what  occurred,  that  of  respondent 
and  Langdon  in  regard  to  the  threats  made  when  the  papers  were 
served  is  in  direct  conflict.  The  probabilities,  however,  are  in  favor  of 
the  latter.  That  of  Langdon  and  Sutherland  as  to  what  occurred  at 
Sutherland's  office  is  in  direct  conflict  with  that  of  respondent ;  but  the 
probabilities  are  rather  in  favor  of  the  truth  of  the  material  part  of 
the  respondent's  story,  to  the  effect  that  he  was  actually  threatened  with 
arrest  and  imprisonment  unless  he  made  the  settlement  demanded,  and 
was  told  and  made  to  believe  that  the  offense  alleged  against  him  was 
one  that  might  subject  him  to  arrest  and  punishment  by  a  long  term 
of  confinement  in  state's  prison. 

We  have  not  overlooked  any  of  the  evidence  bearing  on  the  question 
under  consideration.  It  has  all  been  read  with  care.  Respondent  may 
be  mistaken  as  to  having  been  locked  in  a  room  with  Sutherland,  but 


DURESS  211 

there  is  no  dispute  but  that  he  was  taken  into  Sutherland's  private  room 
where  what  was  said  between  the  two  could  not  readily  be  heard  by 
persons  in  the  general  office  if  the  door  between  the  two  rooms  was 
closed;  and  there  is  evidence  independent  of  respondent's  testimony, 
showing  that  such  was  its  condition  at  least  part  of  the  time.  It  may 
be  that  Sutherland  did  not  use  profane  language  in  threatening  re- 
spondent, and  that  when  the  former  went  into  the  main  office  after  the 
settlement  agreed  upon  the  persons  there  did  not  observe  in  him  any 
appearance  of  excitement,  yet  it  may  be  true  that  he  threatened  the 
respondent  with  arrest  and  imprisonment,  and  produced  in  his  mind  a 
conviction  that  such  would  be  the  result  of  a  refusal  to  speedily  settle 
the  claim,  and  that  he  was  thereby  rendered  incapable  of  exercising 
his  judgment  in  respect  to  complying,  or  refusing  to  comply,  with  the 
demand  made  upon  him ;  and  that  in  taking  the  latter  course  he  merely 
carried  out  Sutherland's  will  instead  of  his  own. 

As  we  view  the  record,  the  issue  as  to  whether  the  threats  were  made 
as  claimed  turns  on  the  evidence  of  respondent  on  the  one  side,  and 
Sutherland  and  Langdon,  considered  practically  as  one  person,  on  the 
other,  and  the  circumstances  characterizing  the  whole  transaction.  The 
unnaturalness  of  the  occurrence  of  giving  the  note  and  mortgage, 
under  all  the  circumstances,  except  as  explained!  by  mental  weak- 
ness on  the  part  of  respondent  and  fear  of  punishment  as  a  crim- 
inal if  he  did  not  settle  the  claim  made  upon  him,  is  such  that  in  view 
of  the  corroborating  evidence  we  cannot  say  but  that  the  trial  court's 
determination,  that  respondent's  story  is  in  the  main  true,  is  correct. 
There  is  evidence  to  the  effect  that  the  attorney  declared,  to  persons 
who  partook  of  the  alleged  impure  meat  with  Sherman,  that  he  had 
scared  respondent  into  a  settlement  of  the  Sherman  claim  for  the  pur- 
pose of  inducing  them  to  make  a  like  claim.  That  evidence  is  dis- 
puted, it  is  true,  but  it  cannot  be  ignored.  There  is  also  the  circum- 
stance of  the  attorney  and  his  alleged  confederate  arming  themselves 
with  a  written  direction  from  respondent  for  his  wife  to  sign  the  pa- 
pers, and  their  going  to  his  farm  immediately  after  he  executed  such 
papers  to  obtain  her  signature  thereto  in  the  absence  of  her  husband. 

It  undoubtedly  appeared  to  the  trial  court  that  if  respondent  had 
been  anxious  to  make  the  settlement,  as  appellants  claim,  and  acted 
of  his  own  free  will,  he  would  have  taken  the  attorney  to  his  home  to 
obtain  her  signature  to  the  papers  in  his  presence,  or  would  have  pro- 
cured her  presence  at  the  attorney's  office ;  and  that  no  unusual  or 
hasty  method  would  have  been  resorted  to  for  the  purpose  of  ob- 
taining such  signature.  There  are  many  other  circumstances  to  which 
special  reference  has  not  been  made,  that  throw  some  light  on  the  trans- 
action under  consideration,  but  further  discussion  of  the  evidence  is 
unnecessary. 

We  are  unable  to  say  that  the  trial  court  was  not  justified  in  say- 
ing that  the  charge  of  duress  was  established  by  clear  and  .satisfactory 
evidence.    True,  in  a  case  of  this  kind  the  facts  essential  to  the  cause 


212  REALITY   OF  CONSENT 

of  action  must  be  established  by  a  greater  degree  of  certainty  than  in 
a  case  where  fraud  is  not  the  foundation  of  the  cause  of  action ;  but 
when  a  trial  court  says  that  the  requisite  certainty  is  established  by 
the  evidence,  that  decision  must  prevail  on  appeal  unless  clearly  wrong. 

The  finding  of  fact  to  the  effect  that  appellant  Scallon  and  his  as- 
signee are  each  chargeable  with  notice  of  the  manner  in  which  the 
note  and  mortgage  were  obtained  from  respondent,  cannot  be  disturbed. 
It  is  not  deemed  necessary  or  advisable  to  discuss  the  evidence  in  re- 
gard to  it.  There  are  many  circumstances  shown  tending  to  prove  that 
the  transfer  of  the  securities  was  made,  first  to  Sutherland  and  then 
to  Scallon  in  order  to  avoid  the  very  attack  made  upon  them  by  the 
bringing  of  this  action.  Moreover,  as  respondent's  counsel  contends, 
since  the  note  was  payable  to  Sherman's  order  and  was  not  indorsed 
by  him  to  Sutherland  or  by  Sutherland  to  Scallon,  the  latter  cannot 
claim  the  protection  of  the  law  merchant.  He  stands  in  precisely  the 
same  position  as  Sherman  did,  the  note  being  subject  to  all  the  equities 
of  the  respondent  the  same  as  if  no  transfer  of  it  had  taken  place. 
Terry  v.  Allis,  16  Wis.  478 ;  Howard  v.  Boorman,  17  Wis.  459;  Daniel, 
Neg.  Inst.  §  741,  and  cases  cited. 

The  judgment  of  the  circuit  court  is  affirmed. 


V.  Undue  Influence  ** 


McPARLAND  et  al.  v.  LARKIN. 
(Supreme  Court  of  Illinois,  1895.     155  111.  84,  39  N.  B.  609.) 

Bill  by  Margaret  Larkin  against  James  McParland  and  others  to 
set  aside  a  deed.    Complainant  obtained  a  decree.    Defendants  appeal. 

Per  Curiam, ^^  In  March,  1880,  James  Fitzgerald  died,  seised  in 
fee  of  lots  72,  73,  74,  and  75,  of  sublot  or  block  42,  in  Canal  Trustees' 
subdivision  of  section  33,  township  40  N.,  range  14  E.  of  the  third 
P.  M.  in  Cook  county.  111.,  which  lots,  with  the  cottage  thereon,  con- 
stituted the  family  homestead,  and  left,  surviving  him,  as  his  children 
and  heirs  at  law,  Edward  Fitzgerald,  Mary  Ann  McParland,  and  Mar- 
garet Fitzgerald,  the  latter  then  a  minor  of  16  years,  who,  after  at- 
taining majority,  married  one  Larkin,  and  is  the  complainant  (ap- 
pellee) in  this  case.  The  decedent  also  left,  as  his  widow,  Bridget 
Fitzgerald,  stepmother  of  said  children.  And,  in  addition  to  said  re- 
alty, he  also  left  $2,000,  life  insurance,  payable  to  his  children.  James 
McParland,  husband  of  the  daughter  Mary  Ann,  was  duly  appointed 

11  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  145,  146. 

12  A  portion  of  the  opinion  is  omitted. 


UNDUE    INFLUENCE  213 

administrator  of  the  estate  and  guardian  of  the  person  and  property 
of  said  minor  child.  In  consideration  of  $1,100,  the  widow  relin- 
quished her  award,  dower,  and  homestead  rights,  the  money  for  this 
purpose  being  advanced,  it  seems,  by  the  children  Edward  and  Mary 
Ann  out  of  their  share  of  the  insurance  money,  who  were  to  be  reim- 
bursed for  the  proportion  thereof  falling  upon  ^Margaret,  out  of  the 
latter's  one-third  interest  in  the  estate.  The  estate  being  somewhat 
involved  in  debt,  means  were  devised  for  paying  the  indebtedness 
without  sale  of  the  realty.  Edward  and  Mary  Ann  each  advanced  a 
third,  the  other  third  being  advanced  out  of  said  minor's  estate,  by  or- 
der of  the  probate  court.  In  1880,  Edward  sold  and  conveyed  his 
one-third  interest  in  the  realty  to  his  sister  Mary  Ann  for  the  sum  of 
$980.  The  minor,  Margaret,  until  her  marriage  to  Larkin,  in  June, 
1882,  made  her  home  with  her  sister,  Mrs.  McParland,  andi  her  hus- 
band who  occupied  the  premises.  They,  it  would  seem,  stood  in  loco 
parentis  to  the  minor.  They  cared  for  her  as  though  she  was  their 
child,  sending  her  to  school,  etc. ;  no  charges  for  board,  clothing,  and 
other  necessaries,  at  the  times  they  were  furnished,  being  made. 

On  February  24,  1882,  six  days  after  attaining  her  majority,  Mar- 
garet executed  a  deed  purporting  to  convey  to  her  sister,  Alary  Ann 
McParland,  her  one-third  interest  in  said  real  estate,  at  which  time 
she  was  paid  a  small  sum  of  money.  This  deed,  as  alleged  in  the  bill, 
was  procured  by  deception  and  undue  influence  exerted  by  her  guardi- 
an, James  McParland,  over  her,  and  without  knowledge  on  her 
part  of  her  rights  in  the  premises,  or  of  what  was  due  her  out 
of  the  estate  of  her  father;  and  that  said  deed  was  executed  solely 
relying  upon  her  guardian,  in  whom  she  had  great  confidence;  and 
that,  in  fact,  she  was  not  aware  of  having  conveyed  away  her  interest 
until  a  short  time  before  the  filing  of  her  bill.  The  sister,  Mrs.  Mc- 
Parland, testified  that  she  tried  to  take  her  mother's  place  towards  com- 
plainant, and  that  the  latter  looked  up  to  her  as  such,  and  the  evidence 
tends  strongly  to  show  that  complainant  looked  to  her  guardian  as 
taking  the  place  of  her  father.  The  guardian  did  not  make  his  final 
report  until  the  25th  of  May,  following  the  making  of  said  deed ;  so 
that,  in  effect,  the  guardianship  continued  until  long  after  the  making 
thereof.    Gilbert  v.  Guptill,  34  111.  112;   Schouler,  Dom.  Rel.  §  382. 

It  is,  however,  contended  that  the  deed  was  made  with  full  knowl- 
edge of  all  the  facts,  six  days  after  complainant  had  arrived  at  her 
majority,  without  undue  influence,  and  for  a  good  and  sufiicicnt  con- 
sideration, and  its  validity  is  not  therefore  to  be  questioned.  It  will  be 
readily  admitted  that,  if  the  parties  were  dealing  at  arm's  length,  fraud 
must  be  shown  to  justify  setting,  aside  the  deed.  Baird  v.  Jackson, 
98  111.  78;  Warrick  v.  Hull,  102  111.  280.  And  it  may  be  generally  said 
that  where  the  guardianship  had  terminated,  and  the  inlhicnce  of  the 
guardian  upon  the  ward)  has  ceased,  so  that  they  can  be  said  to  stand 
upon  an  equality,  transactions  between  them  will  be  regarded  as  bind 


214  REALITY    OF   CONSENT 

ing.  Schouler,  Dom.  Rel.  ■§  389.  "But  such  transactions  are  always  to 
be  regarded  with  suspicion.  And  where  the  influence  still  continues, 
as  if  the  ward  be  a  female  or  a  person  of  weak  understanding,  and 
the  guardian  continues  to  control  the  property  or  to  furnish  a  home, 
the  court  is  strongly  disposed  to  set  aside  the  bargain  altogether." 
But  these  observations  have  but  little,  if  any,  bearing  here,  as  in  this 
case  the  relation  of  the  guardian  and  ward  had  not  been  legally  dis- 
solved. In  such  case,  as  said  by  Mr.  Pomeroy  (2  Eq.  Jur.  961),  "the 
relation  is  so  intimate,  the  dependence  So  complete,  the  influence  so 
great,  that  any  transactions  between  the  two  parties,  or  by  the  guardian 
alone,  through  which  the  guardian  obtains  a  benefit,  entered  into  while 
the  relation  exists,  are  in  the  highest  degree  suspicious.  The  presump- 
tion against  them  is  so  strong  that  it  is  hardly  possible  for  them  to  be 
sustained." 

So,  in  Gillett  v.  Wiley,  126  111.  325,  19  N.  E.  287,  9  Am.  St.  Rep. 
587,  where  the  guardian  procured  his  ward,  after  the  latter  (a  young 
man)  had  attained  his  majority,  to  sign  a  receipt  in  full  for  all  money 
which  came  into  his  hands  as  guardian,  the  ward  not  reading  the  paper 
or  acquainting  himself  with  its  contents,  but  relying  solely  on  the  state- 
ment of  his  guardian  as  to  its  character  and)  purport,  it  was  held  that 
the  transaction  was  void,  even  as  against  a  surety  upon  such  guardian's 
bond,  who  had  taken  a  mortgage  on  the  latter's  land  as  indemnity 
against  loss  as  surety.  And  it  was  there  said:.  "Ordinarily,  one  hav- 
ing the  means  of  information  as  to  the  contents  of  a  paper  executed 
by  him  will  *  *  *  be  held  to  have  known  the  contents,  and  will 
not  be  permitted  to  assert  his  ignorance  of  its  contents  to  avoid  re- 
sponsibility according  to  its  real  import.  Here,  however,  the  signing  of 
this  receipt  was  the  act  and  will  of  the  guardian,  rather  than  that  of 
appellee.  Courts  will  watch  settlements  of  guardians  with  their  wards, 
or  any  act  or  transaction  between  them  affecting  the  estate  of  the 
ward,  with  great  jealousy.  From  the  confidential  relation  between  the 
parties  it  will  be  presumed  that  the  ward  was  acting  under  the  influence 
of  the  guardian,  and  all  transactions  between  thern  prejudicially  af- 
fecting the  interests  of  the  ward  will  be  held  to  be  constructively  fraud- 
ulent. Carter  v.  Tice,  120  111.  277,  11  N.  E.  529.  The  doctrine  is  thus 
stated  in  1  Story,  Eq.  Jur.  §  317:  Where  the  guardianship  has,  in 
fact,  ceased  by  the  majority  of  the  ward,  the  courts  'will  not  permit 
transactions  between  guardians  and  wards  to  stand,  even  when  they 
have  occurred  after  the  minority  has  ceased,  and  the  relation  thereby 
actually  ended,  if  the  intermediate  period  be  short,  unless  the  circum- 
stances demonstrate,  in  the  highest  sense  of  the  term,  the  fullest  de- 
liberation on  the  part  of  the  ward,  and  the  most  abundant  good  faith 
on  the  part  of  the  guardian ;  for,  in  all  such  cases,  the  relation  is  still 
considered  as  having  an  undue  influence  upon  the  mind  of  the  ward, 
and  as  virtually  subsisting,  especially  if  all  the  duties  attaching  to  the 
situation  have  not  ceased;  as  if  the  accounts  between  the  parties  have 


UNDUE    INFLUENCE  215 

not  been  fully  settled,  or  if  the  estate  still  remains,  in  some  sort,  under 
the  control  of  the  guardian.'  " 

Here  the  ward  was  a  female,  barely  past  the  age  of  18  years,  practic- 
ally without  knowledge  or  experience  in  business  affairs.  The  peculiar 
interests  of  the  guardian  were  opposed  to  her  own.  His  wife  then 
owned  the  other  two-thirds  of  the  realty  in  question,  and  by  this  deed 
was  acquiring  the  third  belonging  to  the  ward.  The  ward  was  induced 
to  execute  a  deed,  prepared  by  the  guardian  for  her  signature,  for  an 
inadequate  consideration,  greatly  less  than  the  real  value  of  her  inter- 
est, unless  there  be  taken  into  consideration  her  prior  support  and 
maintenance  in  her  sister's  family.  True,  the  presumption  of  undue 
influence  of  the  guardian  is  attempted  to  be  overthrown  by  proof. 
But  as  said  in  the  case  just  quoted  from:  "The  presumption  of  in- 
fluence on  the  part  of  the  guardian,  and  the  dependence  of  the  ward, 
continues  after  the  legal  condition  of  guardianship  has  ended ;  and 
transactions  between  them  during  the  continuance  of  the  presumed 
influence  of  the  guardian  will  be  set  aside,  unless  shown  to  have  been 
the  deliberate  act  of  the  ward,  after  full  knowledge  of  her  rights.  In 
all  such  cases  the  burden  rests  heavily  upon  the  guardian  to  prove  the 
circumstances  of  knowledge,  and  free  consent  on  the  part  of  the  ward, 
good  faith,  and  absence  of  influence,  which  alone  can  overcome  the 
presumption." 

It  is  not  necessary  in  such  cases  that  actual  and  intentional  fraud  be 
established.  It  is  sufficient,  when  the  parties  sustained  the  relation  of " 
guardian  and  ward,  that  the  former  has  gained  some  advantage  by 
the  transaction  with  his  ward,  to  throw  the  burden  of  proving  good 
faith  and  absence  of  influence,  and  of  knowledge  and  free  consent  of 
the  ward,  upon  the  guardian.  This  we  are  not  prepared,  after  the 
most  careful  consideration  of  the  evidence,  to  say  has  been  done,  and 
the  decree  of  the  chancellor  setting  aside  the  deed  must  be  affirmed. 
Nor  can  it  make  the  slightest  difference  that  the  conveyance  was  made 
to  the  wife  of  the  guardian,  under  whom  he  subsequently  acquired  title. 
As  already  seen,  both  the  husband  and  wife  stood  in  the  relation  of 
parents  to  complainant,  while  the  husband  was  guardian.  The  rela- 
tions precluded  their  deriving  advantage  from  the  ward,  and  it  was  his 
duty  to  protect  her  estate  from  spoliation  from  whatever  source. 

It  is  next  insisted  that  in  respect  of  the  $860,  which  constituted  the 
consideration  for  the  deed,  the  court  should,  by  its  decree,  have  re- 
quired return  by  the  ward  of  the  amount,  or  a  sale  of  the  ward's  in- 
terest in  the  premises  to  pay  it,  as  a  condition  upon  which  the  deed 
should  be  canceled.  This  contention  is  without  merit.  It  is  true  that 
in  case  of  sale  and  conveyance  of  land  by  the  ward  to  the  guardian, 
where  the  ward  afterwards  elects  to  repudiate  the  transaction,  and 
seeks  in  equity  to  have  the  deed  set  aside,  he  must  do  equity,  and  pay 
back  to  the  guardian  the  am')unt  received,  or  else  suffer  a,  decree 
charging  his  land  with  sale  to  suti.fy  the  same.    VVickiser  v.  Cook,  8S 


216  REALITY    OF   CONSENT 

111.  68.  But  such  is  not  the  case  here.  By  the  findings  of  the  master, 
approved  by  the  court,  large  sums  of  money  were  found  due  the  ward 
from  the  guardian,  and  in  the  settlement  of  which  the  court,  by  its 
decree,  credited  the  guardian  with  the  above  amount,  which  was  equiva- 
lent to  a  payment  in  money.  It  would  be  useless  for  the  court  to 
make  the  consideration  paid  a  charge  on  the  ward's  land  when,  by  an 
adjustment  of  the  amounts  due  between  them,  it  could,  and  in  fact 
should,  be  deducted.  There  was  no  occasion  for  such  an  order  when 
the  guardian  could  be  paid  by  simply  deducting  it  from  the  amount  ow- 
ing to  the  ward. 

It  is  further  insisted  that  appellee  should  take  her  interest  in  the 
property  as  it  was  at  the  date  of  the  deed ;  that  all  improvement  made 
thereon  belonged  to  the  appellants,  subject  to  the  right  of  appellee  to 
obtain  title  thereto  by  contribution  of  her  share  of  the  cost  or  present 
value  thereof ;  and  the  doctrine  in  respect  of  tenants  in  common — that, 
where  one  tenant  makes  improvements  on  the  premises  held  by  them 
in  common,  the  court,  in  making  partition,  should  require  due  compen- 
sation therefor,  from  the  other  tenants  to  be  made — is  invoked  in  sup- 
port of  this  view.  The  court  found  that  Mary  Ann  McParland, 
grantee  in  the  deed,  "was  not  an  innocent  purchaser  of  said  real  es- 
tate, but  was  charged  with  and  had  full  knowledge  of  the  fiduciary  re- 
lation existing,  at  the  time  of  said  contract  and  sale  of  said  real  estate, 
between  the  complainant  and  the  guardian,  her  husband." 

This  finding  is  unquestionably  sustained  by  the  proof.  The  grantee 
was  bound  to  know  that  her  husband,  the  guardian,  had  no  authority, 
except  by  order  of  the  probate  court,  to  do  otherwise  than  protect,  care 
for,  and  preserve  the  estate  for  the  benefit  of  his  ward,  until  the  lat- 
ter attained  majority  or  he  was  legally  discharged  from  his  office. 
She  was  bound  to  know  the  fallibility  of  her  title,  andl  that,  under 
the  circumstances,  it  was  defeasible  on  attainment  of  the  ward's  ma- 
jority, at  the  latter's  election,  and  to  know,  as  above  shown,  that  the 
transactions  between  the  guardian  and  ward  culminating  in  the  mak- 
ing of  said  deed  by  the  latter  to  her  were  liable  to  be  declared  fraud- 
ulent and  void.  She  was  bound  to  know  that  it  was  the  guardian's 
duty  to  keep  the  premises  in  good  repair,  and  render  them  available  as 
a  means  of  revenue  for  the  benefit  of  the  ward,  and  to  this  end,  with 
the  sanction  of  the  court,  to  use  the  ward's  cash  in  his  hands  for  that 
purpose  within  reasonable  limits.  These  principles  are  familiar.  But 
she  was  also  bound  to  know  that  he  could  not,  by  virtue  of  guardian- 
ship, and  without  ^ny  order  from  any  competent  tribunal,  erect  build- 
ings upon  the  land  or  make  expensive  permanent  improvements  there- 
on. And  it  has  been  held  that  where  the  guardian  makes  advancement 
of  money  for  such  purpose,  without  any  order  of  court,  he  is  remedi- 
less. Schouler,  Dom.  Rel.  §  351;  Hassard  v.  Rowe,  11  Barb.  (N. 
Y.)  22 ;  Bellinger  v.  Shafer.  2  Sandf .  Ch.  (N.  Y.)  293. 

Such,  however,  has  not  been  as  yet  the  holding  of  this  court  in  such 


UNDUE    INFLUENCE  217 

case.  But  by  section  24,  c.  64,  Rev.  St.,  it  is  provided!:  "The  guardian 
may,  by  leave  of  the  county  court,  mortgage  the  real  estate  of  the  ward 
for  a  term  of  years  not  exceeding  the  minority  of  the  ward,  or  in  fee; 
but  the  time  of  the  maturity  of  the  indebtedness  secured  by  such  mort- 
gage shall  not  be  extended  beyond  the  time  of  minority  of  the  ward." 
In  passing  upon  this  section  (then  section  134  of  the  statute  of  wills), 
this  court,  in  Merritt  v.  Simpson,  41  111.  391,  where  the  guardian  had 
mortgaged  land  of  his  ward  in  fee,  beyond  the  period  of  minority,  for 
money  which  was  used  in  erecting  a  brick  store  on  the  premises,  which 
brought  a  large  rental,  held  that  such  mortgage  was  nugatory  and  void 
as  far  as  the  interests  of  the  ward  were  involved.  And  it  seems  to  be 
generally  held  that  the  guardian  cannot  ordinarily  execute  a  mort- 
gage which  will  be  operative  as  a  lien  on  the  ward's  land  beyond  the 
term  of  minority,  and  the  ward,  on  reaching  majority,  elects  to  disaf- 
firm it,  and  that  the  only  safe  course  for  the  guardian  to  pursue  is  to 
first  secure  the  order  of  court  authorizing  the  mortgage,  if  there  be 
some  statutory  provision  permitting  it.  1  Jones,  Mortg.  102b ;  Schou- 
ler,  Dom,  Rel.  §  352 ;  and  cases  in  notes. 

It  would  therefore  necessarily  follow  that  Mary  Ann  McParland, 
not  being  an  innocent  purchaser,  but  having  taken  her  deed  with  full 
knowledge  of  the  guardianship  and  infirmity  of  her  title,  was  bound 
to  know  that  the  mortgaging  of  said  property  for  the  purpose  of  mak- 
ing improvements  thereon  was,  as  to  the  interest  of  the  ward,  wholly 
unauthorized,  and  done  at  her  peril.  She  is  entitled  to  no  more  pro- 
tection in  equity  than  the  guardian  himself  would  be  had  he  taken 
the  deed  in  his  own  name  instead  of  his  wife's.  The  legal  and  logical 
effects  are  the  same.  With  such  knowledge,  she  cannot  be  permitted 
to  take  advantage  of  that  which,  in  legal  contemplation,  is  her  own 
wrong,  to  burden  the  estate  of  the  ward.  And  no  good  reason  exists 
why  the  ward  might  not,  after  attaining  majority,  demand,  as  in  case 
where  the  guardian  himself  has  placed  unauthorized  burdens  and  im- 
provements upon  the  estate,  to  be  placed  in  statu  quo.  Schouler, 
Dom.  Rel.  §  348.  But  the  court  may,  in  the  exercise  of  its  equity  pow- 
ers, protect  indebtedness  incurred  for  improvements  upon  the  ward's 
estate,  upon  the  theory  that  the  estate  has  been  benefited  and  the  ward 
received  an  advantage  thereby.  Id.  §  351;  Hood)  v.  Bridport,  11  Eng. 
Law  &  Eq.  271 ;  Jackson  v.  Jackson,  1  Grat.  (Va.)  143 ;  1  Atk.  489. 
And  this  the  court  did  by  finding  the  appellee  to  be  entitled  to  a  one- 
third  interest  in  the  premises,  subject  to  the  lien  of  the  trust  deeds 
thereon,  which  had  been  given  to  make  said  improvements,  after  the 
execution  of  the  deed. 

As  to  the  improvements  made  upon  the  old  house  during  appellee's 
minority,  and  without  any  authority  from  the  probate  court,  aiipcllce 
electing  to  repudiate  all  liability  therefor,  the  court  held  rightfully,  wc 
think,  that  the  interest  of  the  ward  should  not  be  incumbered  or 
chargeable  therewith,  but  that  apijKllant  and  his  wife,  having  placed 


218  REALITY    or   CONSENT 

such  improvements  in  violation  of  the  trust,  were  not,  in  equity,  en- 
titled to  recompense  for  the  same.  The  court,  however,  decreed  that 
appellants  should  be  allowed  to  remove  the  old  cottage,  which  had 
been  remodeled  and  improved,  from  the  premises  within  four  months, 
and,  in  default  thereof,  that  the  same  should  become  part  thereof.  Of 
this  ruling  we  think  appellants  have  no  right  to  complain.  These  im- 
provements were  placed  upon  said  premises,  and  the  interest  of  appel- 
lee wrongfully  burdened  to  pay  for  the  same.  Appellants  took  the 
risk,  and  made  such  improvements  with  knowledge  that  they  were  do- 
ing so  wrongfully,  and  without  the  shadow  of  authority  from  any 
competent  source.     *     ♦     ♦ 

The  decree  of  the  circuit  court  will  be  affirmed.    Affirmed. 


LEGALITY   OF  OBJECT  219 

LEGALITY  OF  OBJECT 

I.  A^eements  in  Violation  of  Positive  Law  * 

L  Breach  of  Rules  of  Common  Law 


ATKINS  V.  JOHNSON. 
(Supreme  Court  of  Vermont,  1870.     43  Vt.  78,  5  Am.  Rep.  260.) 

Assumpsit  as  per  declaration,  which  is  set  out  in  the  opinion  of  the 
court.  Trial  on  general  demurrer  to  the  declaration,  at  the  March 
term,  1870,  Peck,  J,,  presiding.  The  court,  pro  forma,  adjudged  the 
declaration  insufficient,  and  rendered  judgment  for  the  defendant  to 
recover  his  costs.    Exceptions  by  the  plaintiff. 

PiERPOiNT,  C.  J.  The  case  comes  into  this  court  upon  a  general 
demurrer  to  the  plaintiff's  declaration. 

The  declaration  alleges  that  "on  the  22d  day  of  July,  1867,  the  de- 
fendant, by  his  agreement  in  writing  of  that  date,  undertook  and  prom- 
ised the  plaintiff  that,  in  consideration  that  the  plaintiff  would  print 
and  publish  an  article  in  the  Argus  and  Patriot,  a  weekly  newspaper 
published  in  Montpelier  by  the  plaintiff,  entitled  'A  Jack  at  all  Trades 
Exposed,'  that  said  article  was  all  true,  that  there  was  enough  to  back 
it  up,  &c.,  and  that  he,  the  said  defendant,  would  defend  and  save 
harmless  the  plaintiff  from  all  damage  and  harm  that  might  accrue 
to  the  plaintiff  in  consequence  of  publishing  said  article.  That  said 
article,  if  untrue,  was  a  libel  upon  the  character  of  one  John  Gregory ; 
that  relying  upon  the  said  promises  of  the  defendant  he  published  the 
article;  that  after  said  publication  the  said  Gregory  called  upon  the 
plaintiff  for  the  name  of  the  writer  of  the  article ;  that  thereupon  the 
defendant  requested  the  plaintiff  not  to  give  the  said  Gregory  the  name 
of  the  writer,  and,  in  consideration  thereof,  promised  the  plaintiff  that 
he  would  save  him  from  all  harm ;  that  if  said  Gregory  sued  the  plain- 
tiff, that  he,  the  defendant,  would  defend  the  suit,  prove  the  charges, 
and  save  the  plaintiff  from  all  trouble  and  expense  in  the  premises. 
The  plaintiff,  relying  thereon,  withheld  the  name  of  the  defendant  as 
the  author  of  said  article;  that  the  said  Gregory  sued  the  plaintiff; 
that  the  defendant  failed  to  defend  the  said  suit,  and  the  said  Gregory 
recovered  a  judgment  against  the  plaintiff,  which  he  has  been  compelled 
to  pay,  and  the  defendant  refuses  to  indemnify  him." 

The  plaintiff  is  here  seeking  to  compel  the  defendant  to  indemnify 

1  For  discussion  of  yrluciijles,  see  Clark  on  Coutracta  (L'd  Ed.)  §8  150, 
151,  153. 


220  LEGALITY  OF  OBJECT 

him  lor  the  damage  which  he  has  sustained,  in  consequence  of  publish- 
ing a  Hbel,  at  the  request  of  the  defendant,  and  from  the  consequences 
of  which  the  defendant  agreed  to  save  him  harmless. 

The  question  is,  whether  such  an  agreement  as  the  plaintiff  sets  out 
in  his  declaration  can  be  legally  enforced. 

The  general  principle,  that  there  can  be  no  contribution  or  indemnity, 
as  between  joint  wrong-doers,  is  too  well  settled  to  require  either  argu- 
ment or  authority. 

To  this  rule  there  are  many  exception's,  and  prominent  among  them 
is  the  class  of  cases  where  questions  arise  between  different  parties  as 
to  the  ownership  of  property,  and  a  third  person,  supposing  one  party 
to  be  in  the  right,  upon  the  request  and  under  the  authority  of  such 
party,  does  acts  that  are  legal  in  themselves,  but  which  prove  in  the 
end  to  be  in  violation  of  the  rights  of  the  other  party,  and  he,  in  con- 
sequence thereof,  is  made  liable  in  damages.  If  in  such  case  there  was 
a  promise  of  indemnity,  the  law  will  enforce  it,  and  if  there  was  not, 
if  the  circumstances-  will  warrant  it,  the  law  will  imply  a  promise  of 
indemnity,  and  enforce  that.  Of  this  class  are  most  of  the  cases  cited 
ond  relied  upon  by  the  counsel  for  the  plaintiff,  such  as,  Betts  v.  Gib- 
bins  [29  Eng.  Com.  Law,  47]  ;  Adamson  v.  Jarvis  [13  Eng.  Com.  Law, 
403]  ;  Wooley  v.  Batte  [12  Eng.  Com.  Law,  649]  ;  Avery  v.  Halsey 
[14  Pick.  (Mass.)  174],  &c.  But  we  apprehend  that  no  exception  has 
ever  been  recognized  broad  enough  to  embrace  a  case  like  the  present ; 
indeed  such  an  exception  would  be  a  virtual  abrogation  of  the  rule. 

In  this  case,  these  parties  in  the  outset  conspired  to  do  a  wrong  to 
one  of  their  neighbors,  by  publishing  a  libel  upon  his  character.  The 
publication  of  a  libel  is  an  illegal  act  upon  its  face.  This,  both  parties 
are  presumed  to  have  known.  The  publication  not  only  subjects  the 
party  publishing  to  a  prosecution  by  the  person  injured  for  damages, 
but  also  to  a  public  prosecution  by  indictment.  In  either  case,  all  that 
would  be  required  of  the  prosecutor  would  be  to  prove  the  publication 
by  the  party  charged.  The  law  in  such  case  presumes  malice  and  dam- 
age, and  the  prosecutor  would  be  entitled  to  a  judgment,  unless  the 
party  charged  could  introduce  something  by  way  of  defense  that  would 
have  the  effect  to  discharge  him  from  legal  liability ;  failing  in  that, 
the  party  would!  be  made  liable  upon  a  simple  state  of  facts,  all  of 
which  he  perfectly  understood  at  the  time  he  commenced  his  unjustifi- 
able attack. 

In  this  case,  both  these  parties  knew  that  they  were  arranging  for 
and  consummating  an  illegal  act,  one  that  subjects  them  to  legal  lia- 
bility, hoping,  to  be  sure,  that  they  might  defend  it ;  but  the  plaintiff, 
fearing  they  might  not  be  able  to  do  so,  sought  to  protect  himself  from 
the  consequences,  by  taking  a  contract  of  indemnity  from  the  defend- 
ant. To  say  under  such  circumstances  that  these  parties  were  not  joint 
wrong-doers,  within  the  full  spirit  and  meaning  of  the  general  rule, 
would  be  an  entire  perversion  of  the  plainest  and  simpliest  proposition. 
This  being  so,  the  law  will  not  interfere  in  aid  of  either.    It  will  not 


AGREEMENTS   IN    VIOLATION    OF    POSITIVE   LAW  221 

inquire  which  of  the  two  are  most  in  the  wrong,  with  a  view  of  ad- 
justing the  equities  between  them,  but  regarding  both  as  having  been 
.understandingly  engaged  in  a  violation  of  the  law,  it  will  leave  them 
as  it  finds  them,  to  adjust  their  differences  between  themselves,  as 
they  best  may. 

But  it  is  said  in  argument,  that  to  apply  this  rule  in  a  case  like  the 
present  is  an  encroachment  upon  the  "freedom  of  the  press."  We  do 
not  so  regard  it.  The  freedom  of  the  press  does  not  consist  in  law- 
lessness, or  in  freedom  from  wholesome  legal  restraint.  The  publisher 
of  a  newspaper  has  no  more  right  to  publish  a  libel  upon  an  individual, 
than  he  or  any  other  man  has  to  make  a  slanderous  proclamation  by 
word  of  mouth. 

It  is  also  said  that  the  publisher  of  a  newspaper,  in  his  desire  to  fur- 
nish the  public  with  information  of  what  is  transpiring  in  the  com- 
munity, is  liable  to  be  misled  and  deceived  in  regard  to  what  he  pub- 
lishes. This  is  undoubtedly  true,  and  it  is  equally  true  that  he  often 
is  deceived ;  but  in  such  case  he  ordinarily  has  ample  means  of  relieving 
himself,  either  by  correcting  the  error,  or  giving  up  the  name  of  the 
author  of  the  objectionable  communication.  Had  the  plaintiff  in  this 
case  given  the  name  of  the  author  of  the  article  to  Gregory  when  he 
asked  for  it,  he  would  undoubtedly  have  cast  the  responsibility  upon 
the  shoulders  of  him  who  ought  to  bear  it.  By  refusing  to  do  this, 
he  put  himself  in  the  gap,  and  voluntarily  assumed  the  whole  responsi- 
bility, relying  on  the  defendant's  guaranty  to  indemnify  him. 

But  it  is  further  insisted,  that  what  is  alleged  to  have  transpired  be- 
tween the  plaintiff  and  defendant  after  Gregory  had  called  on  the 
plaintiff  for  the  name  of  the  author,  constituted  a  new  and  independ- 
ent contract,  based  upon  a  new  and  legal  consideration.  This  proposi- 
tion we  think  is  not  tenable.  What  passed  between  the  parties  on 
that  occasion  is  a  mere  reiteration  of  the  original  agreement,  and  based 
substantially  upon  the  same  consideration.  It  was  evidently  so  regard- 
ed by  the  pleader  when  he  drew  the  declaration.  It  is  all  incorporated 
in  the  same  count,  being  a  simple  narration  of  the  events  as  they  trans- 
pired. The  promise  on  that  occasion  was  to  save  the  plaintiff  from 
all  harm,  trouble  and)  expense  in  the  premises,  in  case  the  said  Gregory 
should   sue  him. 

This  question  was  fully  considered  in  the  case  of  Shackell  v.  Rosier, 
29  Eng.  Com.  L.  695.  In  that  case  the  plaintiff,  wShackell,  was  the  pub- 
lisher of  a  newspaper.  The  defendant  applied  to  him  to  publish  an 
article  that  was  libelous  on  its  face,  but  which  the  defendant  assured 
him  was  true.  After  the  publication,  the  party  aggrieved  brought  his 
action  against  the  plaintiff  for  the  libel.  The  defendant  thereupon 
promised  the  plaintiff,  that  if  he  would  defend  said  suit.  he.  the  defend- 
ant, would  save  harmless  and  indemnify  the  plaintiff  from  all  pay- 
ments, costs,  charges  and  expenses,  &c.  On  trial,  there  was  a  verdict 
for  the  plaintiff.  This  was  arrested  and  set  aside.  Park.  J.,  says  it 
is  impossible  to  look  at  this  declaration,  without  seeing  that  the  publica- 


222  LEGALITY   OF   OBJECT 

tion  of  the  libelous  matter  formed  part  of  the  consideration  for  the 
defendant's  promise.  "It  would  be  productive  of  great  evil,  if  the 
courts  were  to  encourage  such  an  engagement  as  this,  and  thereby  hold 
out  inducement  to  the  propagation  of  illegal  and  unfounded  charges ;" 
and  then  quotes  from  Lord  Lyndhurst  as  follows :  "I  know  of  no  case 
in  which  a  person,  who  has  committed  an  act,  declared  by  the  law  to 
be  criminal,  has  been  permitted  to  recover  compensation  against  a  per- 
son who  has  acted  jointly  with  him  in  the  commission  of  the  offense." 
Vaughan,  J.,  says:  "In  this  case  the  coi;rt  itself  would  become  acces- 
sory to  the  publication  of  libels,  if  it  was  to  enforce  such  a  contract  as 
the  present."  Bosanquet,  J.,  says :  "I  am  of  opinion  that  the  promise 
and  consideration  both  appear  on  the  record  to  be  illegal.  The  promise 
is  to  save  harmless  and  indemnify  the  plaintiff,  &c.  It  appears  that  the 
publication  was  made  at  the  solicitation  of  the  defendant,  a  publica- 
tion manifestly  illegal,  and  open  to  indictment ;  at  once  the  subject  of 
an  action  at  the  suit  of  the  party  offended,  and  an  offense  against  the 
public.  The  case  does  not  therefore  fall  within  the  principle  laid  down 
by  Lord  Kenyon,  in  Merryweather  v.  Nixan  [8  T.  R.  186] ,  as  the  act 
done  by  the  plaintiff  here  was  unlawful  within  his  own  knowledlge." 
The  principles  recognized  and  promulgated  in  this  decision  cover  sub- 
stantially the  whole  case  now  before  us. 

The  position,  in  which  the  facts  confessed  upon  the  record  place  the 
defendant,  is  not  an  enviable  one.  He  seems  to  have  originated  the  mis- 
chief—to have  induced  the  plaintiff  to  aid  him  in  carrying  it  into  effect, 
by  assurance  of  the  truth  of  the  statements,  and  a  promise  of  indem- 
nity, and  after  standing  by  and  seeing  the  plaintiff  amerced  in  dam- 
ages, takes  advantage  of  a  strictly  legal  defense,  and  throws  the  whole 
responsibility  upon  the  plaintiff.  Personally,  it  would  have  given  me 
satisfaction  to  have  decided  the  case  for  the  plaintiff,  if  it  could  have 
been  done  without  violating  well-established  and  salutary  rules  of  law. 

Judgment  of  the  county  court  is  affirmed. 


2.  Agreements  in  Breach  oe  Statute 
(A)  In  General — Prohibition  by  Statute 


VANMETER  et  al.  v.  SPURRIER  et  al. 
(Court  of  Appeals  of  Kentucky,   1893,     94  Ky.   22,  21   S.   W.  337.) 

Action  by  Spurrier  &  Bading  against  H.  B.  Vanmeter  and  others  on 
a  note  given  by  defendants  to  the  Thompson  &  Edwards  Fertilizer 
Company  in  payment  of  fertilizers.  From  a  judgment  in  plaintiffs' 
favor,  defendants  appeal. 


AGREEMENTS   IN    VIOLATION    OF   POSITIVE   LAW  223 

Lewis,  J.^  Appellees,  Spurrier  &  Bading,  assignees,  brought  this 
action  on  a  note  given  October,  1888,  to  the  Thompson  &  Edwards 
Fertilizer  Company  by  appellants,  Vanmeter  and  others,  the  considera- 
tion being  commercial  fertilizer  sold  and  delivered  in  sacks  to  the  pur- 
chasers. Two  distinct  grounds  of  defense  are  stated  in  the  answer, 
which  is  also  made  a  counterclaim:  (1)  That  plaintiffs  represented  the 
commodity  to  be  valuable  and  good  for  wheat,  but  that  it  turned  out 
to  be,  after  being  properly  applied,  and  was,  in  fact,  worthless  as  a 
commercial  fertilizer,  and  consequently  the  note  is  without  considera- 
tion ;  (2)  that  by  reason  of  noncompliance  of  the  sellers  with  provi- 
sions of  "An  act  to  regulate  the  sale  of  fertilizers  in  this  common- 
wealth, and  to  protect  agriculturists  in  the  purchase  and  use  of  the 
same"  approved  April  13,  1886,  the  note  is  void!  and  unenforceable. 

As  an  issue  of  fact  in  respect  to  the  first  alleged  ground  of  defense 
was  made  by  the  pleadings,  and  submitted  to  and  determined  by  the 
jury  in  favor  of  the  plaintiffs,  we  will  not  here  consider  it. 

The  statute  mentioned  is  substantially  as  follows : 

"Section  1.  On  or  before  the  first  day  of  May  of  each  year,  before 
any  person  or  company  shall  sell,  offer,  or  expose  for  sale  in  this  state 
any  commercial  fertilizer  whose  retail  price  is  more  than  ten  dollars 
per  ton,  said  person  or  company  shall  furnish  to  the  director  of  the 
agricultural  experiment  station,  inaugurated  by  the  Agricultural  & 
Mechanical  College  of  Kentucky,  (which  station  is  here  recognized  as 
the  'Kentucky  Agricultural  Station,')  a  quantity  of  such  commercial 
fertilizer,  not  less  than  one  pound,  sufficient  for  analysis,  accompanied 
by  an  affidavit  that  the  substance  so  furnished  is  a  fair  and  true  sample 
of  a  commercial  fertilizer  which  said  person  or  company  desires  to  sell 
within  this  state. 

"Sec.  2.  It  shall  be  the  duty  of  saidi  director  to  make  or  cause  to  be 
made  a  chemical  analysis  of  every  sample  of  commercial  fertilizer  so 
furnished  him,  and  he  shall  print  the  result  of  such  analysis  in  the  form 
of  a  label.  Such  label  shall  set  forth  the  name  of  the  manufacturer, 
the  place  of  manufacture,  the  brand  of  the  fertilizer,  and  the  essential 
ingredients  contained  in  said  fertilizer,  expressed  in  terms  and  man- 
ner approved  by  said  director,  together  with  a  certificate  from  the  di- 
rector, setting  forth  that  said  analysis  is  a  true  and  complete  analysis 
of  the  sample  furnished  him  of  such  brand  of  fertilizer ;  and  he  shall 
also  place  upon  each  label  the  money  value  of  such  fertilizer,  com- 
puted from  its  composition,  as  he  may  dclcrmine.  The  director  shall 
furnish  such  label  in  quantities  of  five  hundred,  or  multiples  thereof, 
to  any  person  or  company  desiring  to  sell,  or  expose  for  sale,  any  com- 
mercial fertilizer  in  this  state. 

"Sec.  3.  Every  package  of  any  commercial  fertilizer  whose  retail 
price  is  over  ten  dollars  per  ton,  sold  or  offered  for  sale  in  this  state, 

a  A  portion  of  tbe  opiiiiou  is  oiuiltcd. 


224  LEGALITY   OF  OBJECT 

shall  have  attached  to  it,  in  a  conspicuous  place,  a  label  bearing  a  cer- 
tified analysis  of  a  sample  of  such  fertilizer  from  said  director,  as 
provided  in  the  foregoing  sections. 

"Sec.  4.  Any  manufacturer  or  vendor  of  any  commercial  fertilizer 
who  shall  sell,  offer,  or  expose  for  sale  any  fertilizer  without  having 
previously  complied  with  the  provisions  of  this  act,  hereinbefore  set 
forth,  shall,  upon  indictment  and  conviction,  be  fined  one  hundred  dol- 
lars for  each  violation  or  evasion  of  this  act,  which  fines  shall  be  paid 
into  the  state  treasury. 

"Sec.  5.  The  director  shall  receive  for  analyzing  and  affixing  his  cer- 
tificate the  sum  of  fifteen  dollars ;  for  labels  furnished,  one  dollar  per 
hundred." 

Section  6  requires  the  director  to  pay  all  such  fees  into  the  treasury 
of  the  Agricultural  &  Mechanical  College  of  Kentucky,  to  be  used  "in 
meeting  the  legitimate  expenses  of  the  station,  in  making  analysis  of 
fertilizers,  in  experimental  tests  of  the  same,  and  in  such  other  ex- 
perimental work  and  purchases  as  shall  inure  to  the  benefit  of  the 
farmers  of  this  commonwealth."  The  director  is  required  to  report  to 
the  commissioner  of  agriculture  the  work  done  by  him,  an  itemized 
statement  of  receipts  and  expenditures ;  and  among  other  provisions 
of  section  7  is  one  authorizing  any  agriculturist,  purchaser  of  a  com- 
mercial fertilizer,  to  forward  a  sample  of  same  to  the  experimental 
station  for  analysis,  free  of  charge. 

Counsel  for  appellees  contends,  for  various  reasons  we  will  now  con- 
sider, that  the  statute  is  unconstitutional.     *     *     *       ^ 

In  our  opinion  the  law  is  valid  in  every  respect.  It  is  admitted  that 
the  retail  price  of  the  fertilizer  sold  to  appellants  was  worth  over  $10 
per  ton,  and  that  no  one  of  the  packages  had  attached  to  it  when  sold 
the  label  required  by  section  3  of  the  statute ;  and  the  main  question, 
therefore,  is  whether  the  contract  sued  on  is,  by  reason  of  such  non- 
compliance with,  and  disregard  of,  the  statute,  void  and  unenforceable. 
It  is  too  well  settled  for  argument  that  a  contract  prohibited  by  statute 
will  not,  nor  should  be,  enforced  by  the  court ;  but  whether  a  contract 
has  been  prohibited  sometimes  depends  upon  construction  of  such  stat- 
ute when  not  clear  in  meaning,  and  we  will  at  present  assume  such  is 
this  case. 

In  Benjamin  on  Sales  (volume  2,  p.  712)  the  following  two  proposi- 
tions are  stated  to  be  fairly  deducible  from  the  authorities:  "First. 
That,  when  the  question  is  whether  a  contract  has  been  prohibited  by 
statute,  it  is  material  in  construing  the  statute  to  ascertain  whether 
the  legislature  had  in  view  solely  the  security  and  collection  of  the 
revenue,  or  had  in  view,  in  whole  or  in  part,  the  protection  of  the  pub- 
lic from  fraud  in  contracts,  or  the  promotion  of  some  object  of  public 
policy.  In  the  former  case  the  inference  is  that  the  statute  was  not 
intended  to  prohibit  contracts;  in  the  latter,  that  it  was.  Second. 
That,  in  seeking  for  the  meaning  of  the  lawgiver,  it  is  material,  also, 


AGREEMENTS   IN    VIOLATION    OF   POSITIVE    LAW  225 

to  inquire  whether  the  penalty  is  imposed  once  for  all  on  the  offense 
of^  failing  to  comply  with  the  requirements  of  the  statute,  or  whether 
it  is  a  recurring  penalty,  repeated  as  often  as  the  offending  party  may 
have  dealings.  In  the  latter  case  the  statute  is  intended  to  prevent 
the  dealings,  to  prohibit  the  contract,  and  the  contract  is  therefore 
void ;  but  in  the  former  case  such  is  not  the  intention,  and  the  contract 
will  be  enforced." 

Tested  by  either  one  of  these  rules,  the  statute  in  question  would 
have  to  be  construed  as  intended  to  prohibit  the  contract  in  case  of 
noncompliance  with  or  breach  of  its  provisions  ;  for  the  legislature  had 
in  view,  when  enacting  it,  not  the  security  ar^d  collection  of  the  rev- 
enue, even  partly,  but  had  in  view  the  protection  of  the  public  from 
fraud  in  contracts  for  sale  of  fertilizers ;  and  it  is  expressly  provided 
in  section  4  that  the  fine  shall  be  imposed  for  each  violation  or  evasion 
of  the  act.  In  Lindsey  v.  Rutherford,  17  B.  Mon.  248,  the  following 
proposition,  stated  in  Chitty  on  Contracts,  was  referred  to  with  ap- 
proval :  "A  contract  is  void  if  prohibited  by  statute,  though  the  statute 
only  inflicts  a  penalty,  because  such  penalty  implies  a  prohibition.  If 
the  contract  be  illegal,  it  makes  no  difference,  in  point  of  law,  whether 
the  statute  which  makes  it  so  had  in  view  the  protection  of  the  revenue 
or  any  other  object."  But  it  was  nevertheless  there  held  that  contracts 
for  sale  and  purchase  of  bills  of  exchange  were  not  prohibited  by  the 
statute  then  under  consideration,  which  required  each  person  conduct- 
ing the  business  of  brokers  or  exchange  dealers  to  obtain  a  license, 
under  penalty  of  a  fine;  the  court  being  of  opinion  that  the  statute 
was  intended  to  raise  revenue,  not  to  strike  a  blow  at  the  business. 

But  neither  the  conclusion  in  that  case  nor  reason  for  it  affects  the 
question  before  us;  for  there  is  a  marked  difference  between  a  statute 
the  prime  or  sole  purpose  of  which  is  to  secure  or  raise  revenue  by 
a  license  tax,  and  one  enacted  to  protect  the  public  against  fraudulent 
sale  of  goods,  or  for  other  reason  of  public  policy.  To  prohibit  a  con- 
tract in  one  case,  where  the  business  is  known  and  recognized  to  be 
otherwise  lawful  and  legitimate,  is  not  essential  to  the  main  pur- 
pose, which  is  to  raise  revenue  by  a  license  tax ;  but  to  do  so  in  the 
other  class  of  cases  is  essential  to  the  main  purpose,  whether  it  be 
to  prevent  fraudulent  sale  of  spurious  and  hurtful  commodities,  to 
secure  ihe  public  health,  or  protect  public  morals. 

That  a  penalty  implies  prohibition  in  such  case  as  this,  though  there 
be  no  prohibitory  words  in  the  statute,  has  been  decided,  not  only  by 
this  court  in  Lindsey  v.  Rutherford,  but  by  numerous  courts  in  Eng- 
land, as  well  as  in  this  country.  In  Woods  v.  Armstrong,  54  Ala.  150, 
25  Am.  Rep.  671,  the  same  question  arose  as  the  one  before  us,  and 
as  to  construction  of  a  statute  enacted  for  the  same  purpose  and  in 
all  respects  like  the  one  we  are  now  considering,  and  the  contract  was 
held  void.  There,  upon  authority  of  a  previous  case  in  the  same  court, 
the  proposition  of  law  already  referred  to  was  thus  stated;   "It  has 

TllROCKM.CoNT. — 16 


226  LEGALITY   OF   OBJECT 

been  repeatedly  determined  that  a  penalty  inflicted  by  a  statute  upon 
an  offense  implies  a  prohibition,  and  a  contract  relating  to  it  is  void, 
even  where  it  is  not  expressly  declared  by  the  statute  that  the  con- 
tract shall  be  void."  In  McConnell  v.  Kitchens,  20  S.  C.  430,  47  Am. 
Rep.  845,  was  determined  the  proper  construction  and  meaning  of  a 
statute  like  the  one  in  question,  and  it  was  held  that  "when  a  mer- 
chant sold  a  fertilizer  without  a  tag  stating  its  chemical  composition, 
etc.,  as  required  by  the  statute  under  penalty,  and  took  a  note  for 
the  purchase  money,  he  could  maintain  no  action  on  the  note."  Under 
a  similar  statute  in  Georgia,  it  was  likewise  held  that  an  action  could 
not  be  maintained  for  the  purchase  price  of  a  fertilizer  sold  by  a  mer- 
chant who  had  violated  provisions  of  the  statute;  and  such  must  be 
the  logical  conclusion  from  the  legal  propositions  referred  to,  which 
are  sustained  by  courts  and  text  writers  generally. 

Counsel  for  appellees  call  our  attention  to  the  cases  of  Harris  v. 
Runnels,  12  How.  79,  13  L.  Ed.  901  and  Niemeyer  v.  Wright,  75  Va. 
239,  40  Am.  Rep.  720.  But  in  the  first  case  it  was  said  that,  "where 
the  statute  is  silent,  and  contains  nothing  from  which  the  contrary 
can  be  properly  inferred,  a  contract  in  contravention  of  it  is  void;" 
and  m  the  other  it  was  conceded  "that,  as  a  general  rule,  a  contract 
founded  on  an  act  forbidden  by  a  statute,  under  a  penalty,  is  void, 
although  it  be  not  expressly  declared  to  be  so;"  and  the  decision  of 
the  case  turned  upon  the  meaning  of  the  various  parts  of  the  statute, 
which,  considered  together,  in  opinion  of  the  court,  authorized  the 
conclusion  that  the  legislature  did  not  intend  to  avoid  a  contract  made 
in  contravention  of  it.  But  there  can  be,  we  think,  no  question  of 
the  intention  of  the  legislature  in  this  case ;  for,  in  language  too  plain 
to  be  misunderstood,  the  statute  makes  compliance  with  each  provi- 
sion thereof  an  indispensable  condition  of  the  right  of  any  person  or 
company  to  sell,  offer,  or  expose  for  sale  in  this  state  any  commercial 
fertiHzer  the  retail  price  of  which  is  more  than  $10  per  ton ;  and  ac- 
cording to  what  rule  of  government  or  administration  of  justice  a 
party  who  has  refused  to  comply  with  that  condition  can  ask  enforce- 
ment of  a  contract  so  distinctly  prohibited  we  are  unable  to  see. 

It  appears  from  the  evidence  that  a  sample  of  the  fertilizer  was 
analyzed  by  the  Kentucky  agricultural  experimental  station  in  January, 
1888,  and  it  is  contended  the  statute  was  thereby  substantially  com- 
plied with.  But  no  record  of  the  analysis  is  required  by  the  statute  to 
be  kept  by  the  director;  nor  is  there  any  other  way  provided  by 
which  the  fact  of  analysis  can  be  made  known  to  a  purchaser,  or  pre- 
served as  a  guide  or  check,  except  by  means  of  the  label,  upon  which 
a  certified  analysis  was  required  to  be  placed.  It  seems  to  us  the 
attaching  of  the  label  to  each  package  is  essential  to  accomplish  the 
purposes  of  the  statute,  and  its  provisions  cannot  be  regarded  as 
complied  with  without  the  label  being  so  attached. 

The  defendants,  in  counterclaim,  ask  for  damages;  but  it  is  hard 
to  see  how  they  have  been  damaged,  in  view  of  the  fact  they  have 


AGKEEMENTS    IN    VIOLATION    OF    POSITIVE    LAW  227 

used  the  fertilizer,  and  paid  nothing  for  it;  wherefore  the  judgment 
is  reversed,  and  cause  remanded  for  a  new  trial,  consistent  with  this 
opinion. 


(B)  Particular  Agreements  in  Breach  of  Statute 
(a)  Requlaxinq  Tbade,  Pbofession,  ob  Business 


See  Van  Meter  v.  Spurrier,  supra,  p.  222. 


(b)   CONTEACTS  IN   BREACH   OF    SUNDAY  LAWS 


HANDY  V.  ST.  PAUL  GLOBE  PUB.  CO. 

(Supreme  Court  of  Minnesota,  1SS9.     41  Minn.  188,  42  N.  W.  872,  4  L.  R. 
A.  466,  16  Am.  St.  Rep.  695.) 

GiLFii^LAN,  C.  J.  The  action  is  upon  a  contract  pleaded  in  the  com- 
plaint, not  in  haec  verba,  but  according  to  its  supposed  effect.  The 
answer  denied  it;  and,  on  the  trial,  the  plaintiff  offered  in  evidence  a 
written  contract  between  the  parties,  the  provisions  of  which  material 
to  this  controversy  were  as  follows : 

The  plaintiff,  in  consideration  of  being  allowed  the  difference  be- 
tween the  rates  he  might  charge  for  advertising  in  the  various  issues 
of  the  St.  Paul  Globe  newspaper  and  the  rates  thereinafter  mentioned, 
agreed  and  contracted  to  take  entire  charge  and  control  of  the  real- 
estate  advertising  business  in  the  daily  and  Sunday  and  weekly  Globe, 
and  the  defendant  agreed,  in  consideration  of  such  services,  to  put 
under  his  full  charge  and  control  all  real-estate  advertising  business 
of  defendant  in  the  daily  and  Sunday  and  weekly  Globe.  The  plain- 
tiff agreed  to  pay  the  defendant  certain  specified  rates  for  said  real- 
estate  advertising,  and  the  defendant  agreed  to  receive  said  rates  as 
full  payment  for  all  said  real-estate  advertisements  which  might  ap- 
pear in  the  daily,  weekly,  or  Sunday  Globe,  without  regard  to  the 
amount  plaintiff  might  charge  and  receive  from  advertisers.  The  con- 
tract was  to  continue  for  the  term  of  five  years,  with  the  option  in 
plaintiff  to  renew  it  for  another  term  of  five  years,  or  for  a  shorter 
time ;  he  to  have  the  right  to  annul  the  agreement  on  giving  30  days' 
notice  of  his  intention  to  do  so. 

It  was  admitted  by  plaintiff,  at  the  time  of  making  the  offer  of  this 
contract,  that  the  Sunday  Globe  referred  to  in  the  contract  was  issued,, 


228  LEGALITY   OF   OBJECT 

published,  and  circulated  on  Sundays,  though  set  up  and  printed  on 
Saturdays.  The  contract  was  objected  to  as  void  upon  its  face  for 
want  of  mutuality,  and  as  being  against  public  policy;  and  it  appears 
to  have  been  argued  that  it  was  against  public  policy  because  it  was 
an  agreement  for  a  violation  of  the  law  in  regard  to  Sunday.  The 
court  below  sustained  the  objection.  The  plaintiff,  of  course,  failed 
in  his  action,  and  he  appeals  from  an  order  denying  his  motion  for  a 
new  trial.  The  same  objections  are  made  to  the  contract  here  as  were 
made  below.  The  plaintiff'  contends  that,  not  having  pleaded  the  il- 
legality of  the  contract,  defendant  could  not  assert  it  on  the  trial. 

It  is  sometimes  necessary  to  plead  the  facts  upon  which  the  illegali- 
ty of  a  contract  or  transaction  depends,  but  it  is  never  necessary  to 
plead  the  law.  When  the  facts  appear,  either  upon  the  pleadings  or 
proofs,  either  party  may  insist  upon  the  law  applicable  to  such  facts. 
In  this  case  the  plaintiff  had,  under  the  pleadings,  to  prove  the  con- 
tract upon  which  he  sued.  If  it  be  void  on  its  face  he,  not  the  defend- 
ant, showed  its  illegality.  Though  the  contract  appears  in  some  re- 
spects a  much  more  favorable  one  to  the  plaintiff"  than  to  the  defend- 
ant, it  is  not  wanting  in  mutuality  of  promises  and  engagements,  so  as 
to  be  without  mutual  considerations.  What  plaintiff  is  to  do  appears 
by  implication  rather  than  by  express  terms.  Fairly  construed,  the 
contract  created  the  relation  of  principal  and  agent  between  the  de- 
fendant, as  principal,  and  the  plaintiff,  as  agent,  for  the  management 
of  defendant's  real-estate  advertising  business, — that  is,  in  the  charge 
of  procuring  advertisements  for  so  much  of  the  space  in  defendant's 
paper  as  it  devoted  to  real-estate  advertising, — and  in  this  business 
there  would  arise  the  duty  in  the  contract.  There  was,  by  implication, 
the  promise  of  plaintiff  to  manage  the  business  faithfully,  and  with 
due  regard  to  the  interest  of  his  principal. 

The  question  of  the  legality  of  the  contract  is,  therefore,  squarely 
presented ;  and  with  a  view  to  that  question,  and  to  some  propositions 
that  are  made  in  connection  with  it,  it  is  necessary  to  say  that  the  con- 
tract is  entire,  so  that  any  taint  of  illegality  in  one  part  affects  the 
whole) of  it.  There  is  no  way  of  severing  it,  so  we  can  say  that,  al- 
though its  stipulations  as  to  the  Sunday  Globe  may  be  in  violation  of 
law,  and  therefore  void,  yet  those  as  to  the  daily  and  weekly  Globe 
may  be  upheld,  or  so  that,  although  for  what  was  to  be  done  under  it 
prior  to  January  1,  1886,  when  the  Penal  Code  went  into  effect,  it  was 
void,  it  might  yet  be  upheld  for  all  that  it  provided  for^  after  that  date. 
To  attempt  that  would  be  to  attempt  making  another  contract  for  the 
parties, — one  that  the  present  contract  furnishes  no  reason  to  suppose 
they  would  have  made  for  themselves.  All  of  the  provisions  of  the 
contract  must,  therefore,  stand  or  fall  together. 

The  plaintiff  insists  that  the  contract  was  not  illegal,  for  it  neither 
was  executed  on  Sunday  nor  required  plaintiff  or  defendant  to  do 
anything  on  Sunday.  It  bound  defendant  to  maintain  and  issue  a 
weekly,  a  daily,  and  Sunday  Globe  for  the  time  specified  in  it,  and  it 


AGREEMENTS   IN    VIOLATION    OF   POSITIVE    LAW  229 

required  plaintiff's  services  in  the  preparation  and  procuring,  so  far  as 
related  to  the  real-estate  advertisements,  of  material  for  each  of  those 
editions  of  the  paper.  According  to  the  terms  of  the  contract,  the 
defendant  was  no  more  at  liberty  to  discontinue  its  Sunday  edition 
than  to  discontinue  its  daily  or  weekly  edition,  or  all  its  editions.  The 
theory  of  the  complaint  is  that  it  was  bound  to  continue  them  all ;  so 
that,  if  to  issue,  publish,  and  circulate  a  newspaper  on  Sunday  was 
against  the  law  as  it  existed  when  this  contract  was  made,  then  the 
parties  contemplated  and  stipulated  for  a  violation  of  the  law  by  each. 
The  law  in  reference  to  Sundays,  in  force  at  the  time  when  the  con- 
tract was  made,  was  section  20,  c.  100,  Gen.  St.  1878,  as  follows:  "No 
person  shall  keep  open  his  shop,  warehouse,  or  work-house,  or  shall 
do  any  manner  of  labor,  business,  or  work,  except  only  works  of  ne- 
cessity and  charity,  *  *  *  on  the  Lord's  day,  commonly  called 
'Sunday;'  and  every  person  so  offending  shall  be  punished  by  a  fine," 
etc. 

A  contract  which  requires  or  contemplates  the  doing  of  an  act  pro- 
hibited by  law  is  absolutely  void.^  No  cases  of  the  kind  have  been  more 
frequently  before  the  courts  than  contracts  which  were  made  on  Sun- 
day, or  which  required  or  provided  that  something  prohibited  by  the 
statute  should  be  done  on  Sunday;  and  in  no  instance  has  any  court 
failed  to  declare  such  a  contract  void.  Unless  the  issuing  and  circulat- 
ing a  newspaper  on  Sunday  is,  within  the  meaning  of  the  statute,  a 
work  of  necessity,  it  is  prohibited  by  it  as  much  as  any  other  business 
or  work.  The  newspaper  is  a  necessity  of  modern  life  and  business, 
but  it  does  not  follow  that  to  issue  and  circulate  it  on  Sunday  is  a  ne- 
cessity. There  are  a  great  many  other  kinds  of  business  just  as  neces- 
sary; many,  indeed  most,  kinds  of  manufacturers  and  mercantile  busi- 
ness are  indispensable  to  the  present  needs  of  men,  but  no  one  would 
say  that,  because  necessary  generally,  the  prosecution  of  such  business 
on  Sunday  is  a  work  of  necessity.  That  carrying  on  any  business 
on  Sunday  may  be  profitable  to  the  persons  engaged  in  it ;  that  it  may 
serve  the  convenience  or  the  tastes  or  wishes  of  the  public  generally, 
— is  not  the  test  the  statute  applies.  To  continue  on  that  day  the  sale 
of  dry-goods  or  groceries,  or  the  keeping  open  of  market,  saloons, 
theaters,  or  places  of  amusement,  might  be  regarded  by  many  as 
convenient  and  desirable,  but  that  would  not  bring  such  business  with- 
in the  exception  in  the  statute. 

At  the  time  this  contract  was  made,  the  issuing,  publishing,  and  cir- 
culating a  newspaper  on  Sunday  was  contrary  to  law ;  and  as  the  con- 
tract provided  for  that,  and  as  it  was  indivisible,  it  was  thereby  ren- 
dered wholly  void.  The  Penal  Code  went  into  effect  January  1,  1886. 
Section  229  provides  that  certain  kinds  of  articles,  among  them  news- 
papers, may  be  sold  in  a  quiet  and  orderly  manner  on  Sunday.  Plain- 
tiff contends  that  the  recognition  of  this  contract,  and  the  continuance 
of  business  under  it  for  more  than  a  year  after  the  issuance  of  the 
Sunday  papcr^  became  legal  by  the  provisions  of  the  Penal  Code,  con- 


230  LEGALITY   OF  OBJECT 

stituted  such  a  ratification  of  the  contract  as  relieved  it  of  any  orig- 
inal taint  of  illegality.  There  is  a  difference  in  the  decisions  on  the 
question  whether  a  contract,  void  merely  because  it  was  made  on  Sun- 
day, may  be  ratified  on  a  secular  day,  so  as  to  become  valid ;  but  there 
is  no  conflict  of  decisions  on  the  proposition  that  a  contract,  void  be- 
cause it  stipulates  for  doing  what  the  law  prohibits,  is  incapable  of 
being  ratified.  That  is  this  case.  The  contract  contemplated  the  doing 
what  the  law  then  in  force  prohibited,  and  for  that  reason  it  was  void. 
It  is  true  the  law  was  so  changed  after,  the  contract  was  made  that, 
from  the  time  of  the  change,  it  became,  as  plaintiff  claims,  lawful  to 
do  those  things  provided  in  the  contract  which  were  unlawful  at  the 
time  it  was  made,  and  so  that,  as  he  claims,  a  contract  like  this,  made 
after  the  change  went  into  effect,  would  have  been  valid.  But  that 
could  not  affect  the  validity  of  the  previous  contract,  which  was  void 
from  the  beginning.  The  parties  might  have  made  a  new  contract  to 
commence  on  or  after  January  1,  1886;  but,  because  of  the  illegality 
in  it,  they  could  not  at  any  time  ratify  this  contract  from  the  begin- 
ning; and,  because  it  is  entire  and  indivisible,  they  could  do  nothing 
amounting  to  less  than  the  making  of  a  new  contract,  which  could  give 
vitality  to  it  for  the  time  since  January  1,  1886. 

An  entire  contract  must  be  ratified,  if  at  all,  as  an  entirety.     Or- 
der affirmed. 


(C)   USUBT 


BLAKE  V.  YOUNT  et  al. 

(Supreme  Court  of  Wasliiugton,  1906.     42  Wash.  101,  84  Pac.  625,  114  Am. 
St.  Rep.  106,  7  Ann.  Cas.  487.) 

Action  by  J.  W.  31ake  against  B.  H.  Yount  and  others.  From  a 
judgment  for  plaintiff,  defendants  appeal. 

Dunbar,  J.  This  was  an  action  on  a  promissory  note  secured  by  a 
real  estate  mortgage.  The  defense  is  (1)  that  the  note  was  usurious; 
(2)  that  the  court  erred  in  not  finding  sufficient  payment. 

The  essential  part  of  the  note  is  as  follows :  "$1,000.00.  Wilbur, 
Wash.,  March  25,  1899.  For  value  received,  one  year  after  date,  I 
promise  to  pay  at  Wilbur,  Wash.,  to  the  order  of  Isaac  B.  Armstrong, 
one  thousand  dollars  in  gold  coin  of  the  United  States  of  America  of 
the  present  standard  value,  with  interest  thereon  at  the  rate  of  10  per 
cent,  per  annum  from  date  until  paid.  If  not  paid  when  due  the  in- 
terest to  be  added!  to  and  become  a  part  of  the  principal,  and  the  whole 
sum  of  both  principal  and  interest  to  bear  interest  thereafter  at  12 
per  cent,  per  annum." 

Section  3669,  1  Ballinger's  Ann.  Codes  &  St.,  provides:  "Any  rate 
of  interest  not  exceeding  twelve  per  centum  per  annum  agreed  to  in 


AGREEMENTS    IN    VIOLATION    OF   POSITIVE    LAW  23^ 

writing  by  the  parties  to  the  contract,  shall  be  legal,  and  no  person  shah 
directly  or  indirectly  take  or  receive  in  money,  goods  or  thing  in  ac- 
tion, or  in  any  other  way,  any  greater  interest,  sum  or  value  for  the 
loan  or  forbearance  of  any  money,  goods  or  thing  in  action  than  twelve 
per  centum  per  annum."  And  subsequent  sections  provide  the  penalty. 
We  do  not  think  that  the  appellants'  contention  that  this  loan  was 
usurious  can  be  sustained.  Nor  is  his  contention  sustained  by  the  cases 
cited. 

In  the  case  of  Brown  v.  Crow  (Tex.  Civ.  App.)  29  S.  W.  653,  upon 
which  appellants  strongly  rely,  the  note  in  question  was  as  follows: 
"$200.00.  Austin,  Texas,  September  12,  1892.  Four  months  after 
date  for  value  received,  I,  we,  or  either  of  us  promise  to  pay  Osceola 
Archer,  or  order,  in  Austin  City,  Texas,  at  his  law  office  the  sum  of 
$200.00,  with  interest  thereon  from  date  until  paid  at  the  rate  of  ten 
per  cent,  per  annum,  interest  to  be  paid  semiannually,  and  in  default 
thereof  the  same  shall  become  principal  and  bear  the  same  rate  of  in- 
terest," etc.  Under  the  Texas  statute,  10  per  cent,  was  the  maximum 
rate  of  interest  allowed;  and  it  will  readily  be  seen  that,  under  the 
conditions  of  the  note  in  that  case,  the  whole  amount  of  interest  for 
a  year  would  have  been  $20.50  instead  of  $20,  which  was  the  largest 
amount  which  the  law  would  permit  on  the  sum  of  $200,  and  was 
plainly  obnoxious  to  the  statute.  But  in  this  case  the  interest  is  not 
to  be  paid  until  the  end  of  the  year,  and  when  so  paid  would  fall  short 
of  the  maximum  amount,  $20.  It  is  true  that,  after  the  expiration  of 
the  year,  the  interest  would  be  at  the  rate  of  12  per  cent,  on  the  $1,000 
loaned,  and  on  the  accrued  interest  of  $100,  or  the  legal  rate  of  interest 
on  $1,100.  But  the  extra  $100  would  belong  at  the  maturity  of  the 
note  to  the  lender,  and  not  to  the  borrower ;  that  amount  he  has  le- 
gally earned,  and  we  see  no  reason  why  he  should  not  have  the  benefit 
of  it.  It  is  within  the  power  of  the  borrower  to  avoid  paying  interest 
on  this  extra  $100  by  paying  it  to  its  legal  and  equitable  owner,^  and 
if,  instead  of  paying  it,  he  appropriates  it  to  his  own  use,  there  is  no 
reason  why  he  should  not  pay  interest  on  it  the  same  as  upon  the 
original  sum. 

It  was  evidently  not  the  intention  of  the  Supreme  Court  of  Texas 
to  hold,  in  Brown  v.  Crow,  supra,  that  the  compounding  of  interest 
created  usury,  for  the  same  court  (60  S.  W.  478),  in  the  case  of  Geis- 
berg  v.  Mut.  Bldg,.  &  Loan  Ass'n,  in  discussing  this  question-  of  usury, 
said:"*  *  ♦  It  certainly  cannot  be  held  that  a  contract  is  usuri- 
ous simply  because,  under  its  provisions,  legal  interest  might  be  de- 
manded upon  overdue  interest  agreed  to  be  paid  in  such  contract.  In 
such  case  the  overdue  interest  becomes  a  separate  interest  demand 
from  the  principal  of  the  contract,  and  the  interest  charge.  1  upon  it 
cannot  be  added  to  or  considered  a  part  of  the  interest  stipulated  to  be 
paid  upon  the  principal,  so  as  to  make  the  contract  usurious." 

Miller  v.  Life  Ins.  Co.,  118  N.  C.  612,  24  S.  E.  484,  54  ;\m.  St.  Rep. 
741,  is  a  case  where  a  life  insurance  company  lent  to  a  borrower  a  suiv 


232  LEGALITY   OF   OBJECT 

of  money  at  the  full.  legal  rate  of  interest,  payable  monthly,  its  re- 
payment being  amply  secured  by  mortgage  on  real  estate,  but  required 
the  borrower,  in  addition  to  and  as  a  condition  of  the  lease,  to  take 
from  and  reassign  to  it  an  endowment  policy  for  a  sum  equal  to  the 
amount  of  the  loan  upon  which  the  premiums  should  be  paid  monthly 
for  seven  years  (or  until  his  death) ;  the  payment  of  the  premiums  be- 
ing also  secured  by  the  mortgage.  There  it  was  rightly  held,  we  think, 
that  the  transaction  was  usurious ;  that  it  was  the  intent  or  purpose  of 
the  lender  of  the  money  to  get  more  than  the  legal  rate  of  interest  for 
the  loan;  and  the  court  properly  stated  that,  if  there  be  a  provision, 
a  condition,  or  a  contingency  in,  or  connected  with,  the  contract,  by 
which  he  may  do  so,  the  transaction  is  usurious.  It  was  also  stated  in 
that  case  that  if  the  usurious  character  of  a  transaction  is  not  manifest 
upon  its  face,  but  depends  on  facts  and  circumstances  connected  with 
the  transaction  as  a  part  of  the  res  gestae,  it  is  a  question  of  fact  as 
well  as  of  law,  and!  should  be  submitted  to  the  jury. 

Watson  V.  Mims,  56  Tex.  451,  was  a  case  where  a  note  was  given  for 
$800,  with  interest  at  the  rate  of  20  per  cent,  per  annum.  A  partial 
payment  was  afterwards  made,  and  a  new  note  given  for  the  principal 
and  unpaid  interest,  amounting  to  $960,  with  interest  thereon  at  the 
same  rate ;  the  law  having  in  the  meantime  made  a  greater  rate  than 
12  per  cent,  usurious.  It  was  held  that  the  second  note  was  not  a 
mere  renewal  of  the  previous  one,  but  was  a  new  and  illegal  contract 
by  reason  of  the  excessive  rate  of  interest  charged  on  the  previously 
accrued  interest.  It  is  manifest  that  this  decision  was  right,  but  it  in 
no  way  tends  to  establish  the  fact  that  the  note  under  discussion  in 
this  case  is  usurious.  And  so  we  think  with  all  the  other  cases  cited  by 
the  appellants — that  none  of  them  sustain  the  contention. 

As  showing  that  the  note  is  not  usurious,  the  respondent  cites :  Hager 
V.  Blake,  16  Neb.  12,  19  N.  W.  780;  Crapo  v.  Hefner,  53  Neb.  251, 
7Z  N.  W.  702 ;  Havemeyer  v.  Paul,  45  Neb.  373,  63  N.  W.  932 ;  Geis- 
berg  V.  Mut.  Bldg.  &  Loan  Ass'n  (Tex.  Civ.  App.)  60  S.  W.  478; 
Martin  v.  Bank,  5  Tex.  Civ.  App.  167,  23  S.  W.  1032;  Stewart  v. 
Petree,  55  N.  Y.  621,  14  Am.  Rep.  352;  Hale  v.  Hale,  1  Cold.  (Tenn.) 
233,  78  Am.  Dec.  490;  Gilmore  v.  Bissell,  124  111.  488,  16  N.  E.  925; 
Bledsoe  v.  Nixon,  69  N.  C.  89,  12  Am.  Rep.  642.  These  cases  also  sup- 
port the  contention  that  the  simple  compounding  of  interest  is  not 
usurious,  and  that  wherever  the  debtor  by  the  terms  of  the  contract 
can  avoid  the  payment  of  the  larger  by  the  payment  of  the  smaller  sum 
at  an  earlier  date,  the  contract  is  not  usurious,  but  additional,  and  the 
larger  sum  becomes  a  mere  penalty. 

The  rule  is  stated  in  29  Am.  &  Eng.  Enc.  Law  (2d.  Ed.)  p.  507,  as 
follows:  "Stipulations  to  the  effect  that  if  the  debt  be  not  paid  at 
maturity  it  shall  draw  interest  thereafter  at  a  rate  greater  than  the 
statutory  limit  are  now  generally  regarded  as  penalties  to  induce 
prompt  payment,  and,  as  the  debtor  has  it  in  his  power  to  avoid  pay- 


^GKEEMENTS   IN    VIOLATIOX    OF    POSITIVE   LAW  233 

ing  the  penalty  by  discharging  the  debt  when  due,  such  agreements  are 
held  to  be  free  from  usury." 

Of  course,  if  it  appears  upon  the  face  of  the  transaction  that  there 
is  any  trick  or  device  or  subterfuge  by  which  the  borrower  is  com- 
pelled, in  order  to  get  the  money,  to  pay  a  larger  amount  of  interest 
than  is  allowed  by  the  statute,  the  note  will  be  determined  to  be  usuri- 
ous ;  as,  for  instance,  where  the  interest  is  computed  in  advance  and 
added  to  the  principal,  and  the  maximum  rate  of  interest  charged  on 
the  principal  and  interest  so  compounded.  In  such  case  it  is  evident 
that  the  borrower  is  compelled  to  pay  more  than  the  maximum  rate 
of  interest  prescribed  by  the  statute,  because  the  form  of  the  note  can 
in  no  wise  change  the  legal  character  of  the  contract.  Or,  if  the  in- 
terest is  to  be  paid  so  often  and  if  not  so  paid  compounded,  and  it  is 
evident  that  the  intention  is  to  obtain  more  than  the  legal  rate  of  inter- 
est, the  result  would  be  the  same. 

But  in  this  case,  where  the  interest  is  not  due  or  payable  until  the 
end  of  a  year,  the  cycle  of  time  which  is  taken  notice  of  by  the  statute, 
the  borrower  has  the  privilege  of  paying  the  interest  at  that  time,  and 
we  see  no  reason  for  holding  the  note  usurious.  Nor  are  we  able  to 
discover  from  the  record  that  the  court  erred  in  finding  the  amount  that 
was  paid  upon  the  note.    The  judgment  is  affirmed. 


(d)  Wagebs  and  Gambling  Tkansactiows 


In  re  TAYLOR  &  CO.'S  ESTATE. 

Appeal  of  HOWARD. 

(Supreme  Court  of  Pennsylvania,  1899.     192  Pa.  304,  43  Atl.  973, 
73  Am.   St.   Kep.  812.) 

Claim  of  William  H.  Howard  against  the  assigned  estate  of  L. 
H.  Taylor  &  Co.  The  auditor  disallowed  the  claim,  and  exceptions 
thereto  were  dismissed  by  the  court,  and  claimant  appeals. 

Mitchell,  J.  It  has  been  settled  by  this  court,  so  often  that  it 
ought  not  to  require  reiteration,  that  dealing  in  stocks,  even  on  mar- 
gins, is  not  gambling.  Stocks  are  as  legitimate  subjects  of  specula- 
tive buying  and  selling  as  flour  or  dry  goods  or  pig  iron.  A  man  may 
buy  any  commodity,  stock  included,  to  sell  on  an  expected  rise,  or 
sell  "short,"  to  acquire  and  deliver  on  an  expected  fall,  and  it  will 
not  be  gambling. 

Margin  is  nothing  but  security,  and  a  man  may  buy  on  credit,  with 
security  or  without,  or  on  borrowed  money,  and  the  money  may  be 
borrowed   from   his   broker   as   well   as    from   a   third   person.     The 


234  LEGALITY  OP  OBJECT 

test  is,  did  he  intend  to  buy,  or  only  to  settle  on  differences?  If  he 
had  bought  and  paid  for  his  stock,  held  it  for  a  year,  and  then  sold, 
no  one  would  call  it  gambling;  and  yet  it  is  just  as  little  so,  if  he 
had  it  but  an  hour  and  sold  before  he  had  in  fact  paid  for  it.  And 
so  with  selling.  Every  merchant  who  sells  you  something  not  yet 
in  his  stock,  but  which  he  undertakes  to  get  for  you,  is  selling  "short" ; 
but  he  is  not  gambling,  because,  though  delivery  is  to  be  in  the  future, 
the  sale  is  present  and  actual. 

The  true  line  of  distinction  was  laid  down  in  Peters  v.  Grim,  149 
Pa.  163,  24  Atl.  192,  34  Am.  St.  Rep.  599,  and  has  not  been  depart- 
ed from  or  varied :  "A  purchase  of  stock  for  speculation,  even  when 
done  merely  on  margin,  is  not  necessarily  a  gambling  transaction. 
If  one  buys  stock  from  A.,  and  borrows  the  money  from  B.  to  pay 
for  it,  there  is  no  element  of  gambling  in  the  operation,  though  he 
pledges  the  stock  with  B.  as  security  for  the  money.  So,  if  instead 
of  borrowing  the  money  from  B.,  a  third  person,  he  borrows  it  from 
A.,  or,  in  the  language  of  brokers,  procures  A.  to  'carry'  the  stock 
for  him,  with  or  without  margin,  the  transaction  is  not  necessarily 
different  in  character.  But  in  this  latter  case,  there  being  no  trans- 
fer or  delivery  of  the  stock,  the  doubt  arises  whether  the  parties  in- 
tended there  should  ever  be  a  purchase  or  delivery  at  all.  Here  is 
the  dividing  line.  If  there  was  not  under  any  circumstances  to  be  a 
delivery,  as  part  of  and  completing  a  purchase,  then  the  transaction 
was  a  mere  wager  on  the  rise  and  fall  of  prices ;  but  if  there  was, 
in  good  faith,  a  purchase,  then  the  delivery  might  be  postponed,  or 
made  to  depend  on  a  future  condition,  and  the  stock  carried  on  mar- 
gin, or  otherwise,  in  the  meanwhile,  without  affecting  the  legality  of 
the  operation." 

This  has  been  uniformly  followed.  Hopkins  v.  O'Kane,  169  Pa. 
478,  32  Atl.  421 ;  Wagner  v.  Hildebrand,  187  Pa.  136,  41  Atl.  34. 
And  the  rule  goes  so  far  that  an  agreement  for  an  actual  sale  and 
purchase  will  make  the  transaction  valid,  though  it  originated  in  an 
intention  merely  to  wager.  Anthony  v.  Unangst,  174  Pa.  10,  34  Atl. 
284. 

Turning  now  to  the  facts  of  the  present  case,  it  is  clear  that  the 
law  was  not  correctly  applied  by  the  auditor  and  the  court  below. 
The  brokers  made  an  assignment  on  December  21,  1895,  on  which 
day  they  held  certain  stock  for  appellant,  which  they  had  bought  on 
his  order;  and  he  had  certain  other  stock,  which  they  had  sold  on 
his  order,  but  which  he  had  not  yet  delivered  to  them.  He  desired 
to  close  the  account,  complete  the  mutual  deliveries,  and  receive  the 
balance  which  the  transactions  left  in  his  favor.  He  was  entitled  to 
do  so.  Even  if  the  transactions  were  wagering,  the  agreement  of  the 
parties  to  make  the  sales  actual  would,  under  Anthony  v.  Unangst, 
174  Pa.  10,  34  Atl.  284,  have  made  them  valid.  It  is  true,  the  settle- 
ment was  not  actually  made  until  January  10th;  but  it  was  made 
as  of  December  20th,  the  day  before  the  assignment,  and  the  auditor 


AGREEMENTS   IN    VIOLATION    OF   POSITIVE    LAW  235 

reports  that  there  had  been  no  change  of  values  meanwhile.  The 
time  of  striking,  a  balance  on  the  books  and  delivering  the  stock  was 
not  important. 

Delivery  is  not  in  itself  a  material  fact.  Its  only  value  is  as  evi- 
dence of  the  intent  to  make  a  bona  fide  sale.  If  such  is  the  intent, 
the  delivery  may  be  present  or  future  without  affecting  validity. 
But  there  was  no  sufficient  evidence  that  the  transactions  were  illegal 
at  any  time.  The  auditor  reports  that  "the  stocks  ordered  to  be 
bought  or  sold  by  the  customers  of  L.  H.  Taylor  &  Co.  were,  as  shown 
by  their  books,  actually  bought  and  sold;  and,  as  this  evidence  is 
uncontradicted,  I  must  and  do  so  find.  *  *  *  Thus,  so  far  as 
Iv.  H.  Taylor  &  Co.  were  concerned,  the  transactions  were  not  ficti- 
tious, but  were  actual  purchases  and  sales  of  stock."  This  finding 
should  have  been  a  warning  to  caution  in  taking  a  different  view  of 
the  appellant's  position  in  the  transactions. 

It  is  true,  the  purchase  or  sale  may  be  actual  on  part  of  the  broker, 
and  merely  a  wager  on  part  of  the  customer  (see  Champlin  v.  Smith, 
164  Pa.  481,  487,  30  Atl.  447) ;  but  there  should  be  at  least  fairly 
persuasive  evidence  of  the  difference.  There  is  none  here.  The 
transactions  covered  by  the  account  began  with  a  small  cash  balance 
to  appellant's  credit,  followed  by  an  order  to  buy  200  shares  of  Wa- 
bash common,  which  were  bought  by  the  brokers,  paid  for  by  appel- 
lant, and  delivered  to  him.  The  close,  two  years  and  a  half  later, 
showed,  as  already  said,  a  large  number  of  shares  in  the  hands  of  the 
brokers  bought  for  appellant,  and  of  which  he  demanded  delivery, 
and  other  shares  sold  for  him,  and  which  he  had  in  his  possession 
ready  to  deliver. 

As  to  the  intermediate  transactions,  appellant  testified,  "It  was  al-. 
ways  the  intention  to  buy  the  stocks  out  and  out,  and  pay  for  them, 
and  I  had  money  to  do  it  with."  In  the  face  of  these  facts  and  this 
uncontradicted  testimony,  the  auditor  found  that  "the  account,  in- 
cluding "his  enormous  short  sales,  has  all  the  earmarks  of  a  gaming 
transaction,  and  I  so  find  it."  This  was  a  mere  inference,  unwar- 
ranted by  the  account  itself,  and  wholly  opposed  to  all  the  evidence 
in  the  case. 

Judgment,  so  far  as  it  relates  to  appellant's  claim,  reversed,  and 
claim  directed  to  be  allowed. 


236  LEGALITY  OF  OBJECT 

II.  Agreements  Contrary  to  Public  Policy  • 

1.  Agreements  Tending  to  Injure  the  Pubuc  Service 

(A)  Assignment  of  Salary  or  Pension  by  Officer, 


BLISS  V.  LAWRENCE. 
SAME  V.  GARDNER. 

(Court  of  Appeals  of  New  York,  1874.     58  N.  Y.  442.) 

Appeals  from  judgments  dismissing  the  complaint.  Defendant  was 
a  clerk  in  the  United  States  treasury  department,  in  New  York  City, 
and  sold  and  assigned  to  plaintiff  a  month's  salary  in  advance  at  a 
discount  of  ten  per  cent,  and  when  the  salary  became  due,  he  collected 
and  converted  it  to  his  own  use.* 

Johnson,  J.  The  controlling  question  in  these  cases  is  that  of  the 
lawfulness  of  an  assignment,  by  way  of  anticipation,  of  the  salary  to 
become  due  to  a  public  officer.  The  particular  cases  presented  are  of 
assignments  of  a  month's  salary  in  advance.  But  if  these  can  be  sus- 
tained in  law,  then  such  assignments  may  cover  the  whole  period  of 
possible  service.  ;  In  the  particular  cases  before  us  the  claims  to  a 
month's  salary  seem  to  have  been  sold  at  a  discount  of  about  ten  per 
cent.  While  this  presents  no  question  of  usury  (since  it  was  a  sale  and 
not  a  loan  for  which  the  parties  were  dealing),  it  does  present  a  quite 
glaring  instance  and  example  of  the  consequences  likely  to  follow  the 
establishment  of  the  validity  of  such  transfers,  and  thus  illustrates 
one  at  least  of  the  grounds  on  which  the  alleged  rule  of  public  policy 
rests,  by  which  such  transfers  are  forbidden.  The  public  service  is 
protected  by  protecting  those  engaged  in  performing  public  duties ; 
and  this  not  upon  the  ground  of  their  private  interest,  but  upon  that 
of  the  necessity  of  securing  the  efficiency  of  the  public  service  by 
seeing  to  it  that  the  funds  provided  for  its  maintenance  should  be  re- 
ceived by  those  who  are  to  perform  the  work  at  such  periods  as  the 
law  has  appointed  for  their  payment. 

It  is  argued  that  a  public  officer  may  better  submit  to  a  loss  in  order 
to  get  his  pay  into  his  hands  in  advance,  than  deal  on  credit  for  his 
necessary  expenses.  This  may  be  true  in  fact,  in  individual  instances, 
and  yet  may  in  general  not  be  in  accordance  with  the  fact.  Salaries 
are  by  law  payable  after  work  is  performed  and  not  before,  and  while 
this  remains  the  law,  it  must  be  presumed  to  be  a  wise  regulation,  and 

8  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  156-175. 
■*  The  statement  of  facts  is  abridged. 


AGREEMENTS   CONTKAEY   TO   PUBLIC   POLIOY  237 

necessary  in  the  view  of  the  law-makers  to  the  efficiency  of  the  pub- 
lic service.  The  contrary  rule  would  permit  the  public  service  to  be 
undermined  by  the  assignment  to  strangers  of  all  the  funds  appro- 
priated to  salaries.  It  is  true  that  in  respect  to  officers  removable  at 
will,  this  evil  could  in  some  measure  be  limited  by  their  removal  when 
they  were  found  assigning  their  salaries;  but  this  is  only  a  partial 
remedy,  for  there  would  still  be  no  means  of  preventing  the  continued 
recurrence  of  the  same  difficulty.  If  such  assignments  are  allowed, 
then  the  assignees  by  notice  to  the  government,  would  on  ordinary 
principles  be  entitled  to  receive  pay  directly  and  to  take  the  place  of 
their  assignors  in  respect  to  the  emoluments,  leaving  the  duties  as  a 
barren  charge  to  be  borne  by  the  assignors.  It  does  not  need  much 
reflection  or  observation  to  understand  that  such  a  condition  of  things 
could  not  fail  to  produce  results  disastrous  to  the  efficiency  of  the 
public  service. 

Some  misapprehension  as  to  the  doctrine  involved  seems  to  have 
arisen  from  the  fact  that  the  modern  adjudged  cases  have  often  re- 
lated to  the  pay  of  half-pay  army  officers,  which  in  part  is  given  as  a 
compensation  for  past  services  and  in  part  with  a  view  to  future 
services.  Upon  a  review  of  the  English  cases,  it  will  appear  that  the 
general  proposition  is  upon  authority  unquestionable,  that  salary  for 
continuing  services  could  not  be  assigned;  while  a  pension  or  com- 
pensation for  past  services  might  be  assigned.  The  doubt,  and  the 
only  doubt  in  the  case  of  half -pay  officers  was  to  which  class  they 
were  to  be  taken  to  belong.  It  was  decided  that  inasmuch  as  their 
pay  was  in  part  in  view  of  future  service,  it  was  unassignable.  Sim- 
ilar questions  have  arisen  in  respect  to  persons  not  strictly  public  offi- 
cers, but  the  principle  before  stated  has  in  the  courts  of  England  been 
adhered  to  firmly.  Flarty  v.  Odium,  3  Term  R.  681 ;  Stone  v.  Lidder- 
dale,  2  Anst.  533;  Davis  v.  Marlboro,  1  Swanst.  79;  Lidderdale  v, 
Duke  of  Montrose,  4  Term  R.  248;  Barwick  v.  Read,  1  H.  Bl.  627; 
Arbuckle  v.  Cowhan,  3  Bos.  &  P.  328;  Wells  v.  Foster.  8  Mees.  & 
W.  149;  Story,  Eq.  Jur.  §  1040d ;  1  Pars.  Cont.  194.  These  cases 
and  writers  sustain  the  proposition  above  set  forth  and  show  the  set- 
tled state  of  the  English  law  upon  the  subject. 

Some  other  cases  are  so  pertinent  to  the  general  discussion  as  to 
deserve  to  be  stated  more  at  length,  especially  as  they  are  not  so  ac- 
cessible as  those  before  referred  to.  Among  them  the  judgment  of 
Lord  Brougham,  in  the  house  of  lords,  in  Hunter  v.  Gardner,  6  VVils. 
&  S.  618,  decided  in  1831,  gives  an  admirable  summary  of  the  state 
of  the  English  law  upon  the  subject.  The  case  was  a  Scotch  appeal, 
in  which  the  Scotch  court  had  approved,  under  the  law  of  tiiat  coun- 
try, a  partial  transfer  of  the  salary  of  a  public  officer.  The  particular 
judgment  was  affirmed  without  deciding  what  the  law  of  Scotland 
was  upon  the  subject.  In  his  judgment  Lord  Brougham  said:.  "The 
court  seem  not  to  have  scrutini/x'd  very  nicely  whether  from  the  na- 
ture of  the  subject-matter,  namely,  the  half-pay  or  the  full  pay  of 


238  LEGALITY   OF  OBJECT 

an  officer  or  a  minister's  stipend,  or  in  the  present  case,  the  salary  of 
an  officer  employed  under  government  and  in  the  execution  of  an  im- 
portant public  trust  an  assignment  can  validly  operate  upon  and  affect 
those  particular  rights ;  but  they  have  nevertheless  assumed  to  deal 
with  them  and  have  directed  that  a  certain  proportion  of  them  shall  be 
assigned  on  the  condition  of  granting  the  benefit  of  the  cessio  bono- 
rum.  Those  cases  undoubtedly  could  not  have  occurred  in  this  coun- 
try. I  may  refer  to  the  w^ell-knov^n  case  of  Flarty  v.  Odium,  3  Term 
R.  681,  which  from  its  importance  was  the  subject  of  much  discussion 
it  being  the  first  case  in  which  it  was  held  that  the  half-pay  of  an  offi- 
cer was  not  the  subject  of  assignment;  and  it  was  followed  in  Lidder- 
dale  V.  Duke  of  Montrose,  in  4  Term  R.,  where  the  doctrine  laid 
down  was  made  the  subject  of  further  discussion,  and  the  court  ad- 
hered to  their  former  view,  that  the  half-pay  was  free  from  attach- 
ment ;  so  that  neither  is  a  man  bound  to  put  it  into  the  schedule  of 
his  assets,  nor  does  the  general  assignment  to  the  provisional  assignee 
transfer  it,  nor  would  a  bargain  and  sale  to  the  assignees  under  a 
commission  of  bankruptcy  pass  it  out  of  the  bankrupt;  it  is  unas- 
signable and  incapable  of  being  affected  by  any  of  those  modes  of  pro- 
ceeding. The  same  doctrine  was  laid  down  with  respect  to  the  profits 
of  a  living  in  the  case  of  Arbuckle  v.  Cowhan,  the  judgment  in  which 
has  been  very  much  considered  in  Westminster  Hall,  and  like  most  ot 
the  judgments  of  that  most  able  and  learned  lawyer,  Lord  Alvanley 
has  given  great  satisfaction  to  the  courts  and  the  profession.  In  the 
report  of  that  case,  your  lordships  will  find  laid  down  the  general  prin- 
ciple, though,  perhaps,  not  worked  out  in  these  words,  that  all  such 
profits  as  a  man  receives  in  respect  to  the  performance  of  a  public 
duty  are,  from  their  very  nature,  exempt  from  attachment  and  in- 
capable of  assignment,  inasmuch  as  it  would  be  inconsistent  with  the 
nature  of  those  profits  that  he  who  had  not  been  trusted,  or  he  who 
had  not  been  employed  to  do  the  duty,  should  nevertheless  receive  the 
emolument  and  reward.  Lord  Alvanley  quotes  Flarty  v.  Odium  and 
Lidderdale  v.  Duke  of  Montrose,  and  in  illustrating  the  principle  on 
which  a  parson's  emoluments  are  not  assignable,  he  does  not  confine 
his  observations  to  the  particular  case  of  half-pay  officers  or  the  case 
of  a  parson's  emoluments,  but  he  makes  the  observation  in  all  its  gen- 
erality, as  applicable  to  every  case  of  a  public  office  and  the  emolu- 
ments of  that  office.  The  first  case  (1  H.  Bl.  627),  decided  by  the 
court  of  common  pleas  (the  case  of  Barwick  v.  Read),  clearly  recog- 
nizes the  principle.  *  *  *  j^  this  case  as  well  as  the  other  case 
of  Arbuckle  v.  Cowhan,  it  was  perfectly  clearly  held  by  the  court  that 
in  all  such  cases,  one  man  could  not  claim  to  receive,  by  assignment 
or  attachment,  emoluments  which  belonged  to  another  deemed  to  be 
capable  of  performing  the  duties  appended  to  those  emoluments,  but 
which  duties  could  not  be  performed  by  the  assignee :  and  there  was 
on  old  case  referred  to  in  Barwick  v.  Read,  and  a  curious  case  in 
Dyer,  in  which  so  long  ago  as  the  reign  of  Elizabeth,  the  question  ap- 


AGEEEMENTS   CONTEARY   TO   PUBLIC   POLICY  239 

pears  to  have  been  disposed  of  by  a  decision  now  undisputed,  and  now 
referred  to  in  Westminster  Hall.  *  *  *  All  these  cases  laid  down 
this  principle,  which  is  perfectly  undeniable,  that  neither  attachment 
nor  assignment  is  applicable  to  such  a  case." 

Other  cases  to  the  same  effect,  of  later  date,  are  likewise  note- 
worthy. In  Hill  V.  Paul,  8  Clark  &  F.  307,  decided  in  1842,  Lord 
Chancellor  Lyndhurst,  speaking  of  the  legality  of  assigning  the  future 
emoluments  of  an  office  in  Scotland,  says :  "That  such  an  assignment 
would  be  illegal  in  England  there  can  be  no  doubt.  Palmer  v.  Bate, 
2  Brod.  &  B.  673,  is  directly  applicable  to  this  case.  And  in  Davis  v. 
Marlboro,  1  Swanst.  79,  there  is  the  observation  of  Lord  Eldon  al- 
ready cited,  which  seems  to  me  quite  in  point  and  which  lays  down 
the  true  rule  and  the  distinction  to  be  observed  in  these  cases,  and  to 
which  for  that  reason  I  refer  as  showing  what  is  the  law  of  England 
on  this  subject."  What  Lord  Eldon  said  in  the  case  referred  to  was : 
"A  pension  for  past  services  may  be  aliened;  but  a  pension  for  sup- 
porting the  grantee  in  the  performance  of  future  duties  is  inalienable." 
And  in  Flarty  v.  Oldlum,  4  Term  R.  248,  the  court  say :  "It  might  as 
well  be  contended  that  the  salaries  of  the  judges  which  are  granted  to 
support  the  dignity  of  the  state  and  the  administration  of  justice  may 
be  assigned." 

In  Arbuthnot  v.  Norton  (1846)  5  Moore,  P.  C.  230,  the  question 
was  whether  an  Indian  judge  could  assign  a  contingent  sum  to  which 
on  his  death  within  six  months  after  his  arrival  in  India  his  repre- 
sentative would  be  entitled  by  law,  and  it  was  held  that  such  an  as- 
signment was  not  against  public  policy  and  would  in  equity  transfer 
the  right  to  the  fund.  In  the  course  of  the  judgment  given  by  Dr. 
Lushington,  he  says:  "We  do  not  in  the  slightest  degree  controvert 
any  of  the  doctrines  whereupon  the  decisions  have  been  founded 
against  the  assignment  of  salaries  by  persons  filling  public  offices ;  on 
the  contrary,  we  acknowledge  the  soundness  of  the  principles  which 
govern  those  cases  but  we  think  that  this  case  does  not  fall  within 
any  of  these  principles ;  and  we  think  so  because  this  is  not  a  sum  of 
money  which  at  any  time  during  the  life  of  Sir  John  Norton  could 
possibly  have  been  appropriated  to  his  use  or  for  his  benefit,  for  the 
purpose  of  sustaining  with  decorum  and  propriety  the  high  rank  in 
life  in  which  he  was  placed  in  India.  We  do  not  see  how  any  of  the 
evils  which  are  generally  supposed  would  result  from  the  assignment 
of  salary,  could  in  the  slightest  degree  have  resulted  from  the  assign- 
ment of  this  sum,  inasmuch  as  during  his  life-time  his  personal  means 
would  in  no  respect  whatever  have  been  diminished,  but  remain  ex- 
actly in  the  same  state  as  they  were." 

In  Liverpool  v.  Wright,  28  L.  J.  (N.  S.)  Ch.  871,  A.  D.  IS59.  in 
which  the  question  related  to  the  alienability  of  the  fees  of  the  office 
of  a  clerk  of  the  peace,  Wood,  V.  C,  after  disposing  of  another 
question,  says:  "Then  there  is  a  second  ground  of  public  policy,  for 
which  the  case  of  Palmer  v.  Vaughn,  3  Swanst.   173,  is  the  leading 


240  LEGALITY  OF  OBJECT 

authority,  which  is  this :  That  independently  of  any  corrupt  bargain 
with  the  appointor,  nobody  can  deal  with  the  fees  of  a  person  who 
holds  an  office  of  this  description,  because  the  law  presumes,  with  ref- 
erence to  an  office  of  trust,  that  he  requires  the  payment  which  the 
law  has  assigned  to  him  for  the  purpose  of  upholding  the  dignity  and 
performing  properly  the  duties  of  that  office,  and  therefore  it  will  not 
allow  him  to  part  with  any  portion  of  those  fees  either  to  the  ap- 
pointor or  to  anybody  else.  He  is  not  allowed  to  charge  or  incumber 
them.  That  was  the  case  of  Parsons  v.  Thompson,  1  H.  Bl.  322.  Any 
attempt  to  assign  any  portion  of  the  fees  of  his  office  is  illegal  on  the 
ground  of  public  policy,  and  held  therefore  to  be  void." 

In  respect  to  American  authority  we  have  been  referred  to  Brackett 
V.  Blake,  7  Mete.  (Mass.)  335,  41  Am.  Dec.  442;  Mulhall  v.  Quinn 
1  Gray  (Mass.)  105,  61  Am.  Dec,  414,  and  Macomber  v.  Doane,  2 
Allen  (Mass.)  541,  as  conflicting  with  the  views  we  have  expressed. 
An  examination  of  these  cases  shows  that  the  point  of  public  policy 
was  not  considered  by  the  court  in  either  of  them,  but  that  the  ques- 
tion was  regarded  as  entirely  relating  to  the  sufficiency  of  the  inter- 
est of  the  assignor  in  the  future  salary  to  distinguish  the  cases  from 
those  of  attempted  assignments  of  mere  expectation,  such  as  those  of 
an  expectant  heir.  The  court  held  that  in  the  cases  cited,  the  expec- 
tation of  future  salary  being  founded  on  existing  engagements,  was 
capable  of  assignment  and  that  the  existing  interest  sufficed  to  support 
the  transfer  of  the  future  expectation.  The  only  other  case  to  which 
we  have  been  referred  is  a  decision  of  the  supreme  court  of  Wis- 
consin. 

In  State  Bank  v.  Hastings,  15  Wis.  78,  the  question  being  as  to  the 
assignability  of  a  judge's  salary,  the  court  say :  "We  were  referred  to 
some  English  cases  which  hold  that  the  assignment  of  the  pay  of 
officers  in  the  public  service,  judges'  salaries,  pensions,  etc.,  was  void 
as  being  against  public  policy,  but  it  was  not  contended  that  the  doc- 
trine of  those  cases  was  applicable  to  the  condition  of  society  or  to  the 
principles  of  law  or  of  public  policy  in  this  country.  For  certainly 
we  can  see  no  possible  objection  to  permitting  a  judge  to  assign  his 
salary  before  it  becomes  due,  if  he  can  find  any  person  willing  to 
take  the  risk  of  his  living  and  being  entitled  to  it  when  it  becomes 
payable." 

We  do  not  understand  that  the  English  decisions  really  rest  on  any 
grounds  peculiar  to  that  country,  although  sometimes  expressed  in 
terms  which  we  might  not  select  to  express  our  views  of  the,  true 
foundation  of  the  doctrine  in  question.  The  substance  of  it  all  is  the 
necessity  of  maintaining  the  efficiency  of  the  public  service  by  seeing  to 
it  that  public  salaries  really  go  to  those  who  perform  the  public  serv- 
ice. To  this  extent  we  think  the  public  policy  of  every  country  must 
go  to  secure  the  end  in  view. 

The  judgments  must  be  affirmed.    All  concur.    Judgments  affirmed. 


AQBEEMENTS   CONTKAEY   TO   PUBLIC   POLICY  241 


(B)  Lobbying  Contracts 


TRIST  V.  CHILD. 
(Supreme  Court  of  the  United  States,  1874.    21  Wall.  441,  22  L.  Ed.  623.) 

Appeal  from  the  supreme  court  of  the  District  of  Columbia;  the 
case  being  thus : 

N.  P.  Trist  having  a  claim  against  the  United  States  for  his  serv- 
ices, rendered  in  1848,  touching  the  treaty  of  Guadalupe  Hidalgo — a 
claim  which  the  government  had  not  recognized — resolved,  in  1866-7 
to  submit  it  to  congress  and  to  ask  payment  of  it.  And  he  made  an 
agreement  v^^ith  Linus  Child,  of  Boston,  that  Child  should  take  charge 
of  the  claim  and  prosecute  it  before  congress  as  his  agent  and  attor- 
ney. As  a  compensation  for  his  services  it  was  agreed  that  Child 
should  receive  25  per  cent,  of  whatever  sum  congress  might  allow  in 
payment  of  the  claim.  If  nothing  was  allowed,  Child  was  to  receive 
nothing.  His  compensation  depended  wholly  upon  the  contingency 
of  success.  Child  prepared  a  petition  and  presented  the  claim  to  con- 
gress. Before  final  action  was  taken  upon  it  by  that  body  Child  died. 
His  son  and  personal  representative,  L.  M.  Child,  who  was  his  partner 
when  the  agreement  between  him  and  Trist  was  entered  into,  and 
down  to  the  time  of  his  death,  continued  the  prosecution  of  the  claim. 
By  an  act  of  the  20th  of  April,  1871,  congress  appropriated  the  sum 
of  $14,559  to  pay  it.  The  son  thereupon  applied  to  Trist  for  payment 
of  the  25  per  cent,  stipulated  for  in  the  agreement  between  Trist  and 
his  father.  Trist  declined  to  pay.  Hereupon  Child  applied  to  the 
treasury  department  to  suspend  the  payment  of  the  money  to  Trist. 
Payment  was  suspended  accordingly,  and  the  money  was  still  in  the 
treasury. 

Child,  the  son,  now  filed  his  bill  against  Trist,  praying  that  Trist 
might  be  enjoined  from  withdrawing  the  $14,559  from  the  treasury 
until  he  had  complied  with  his  agreement  about  the  compensation,  and 
that  a  decree  might  pass  commanding  him  to  pay  to  the  complainant 
$5,000,  and  for  general  relief. 

The  defendant  answered  the  bill,  asserting,  with  other  defences 
going  to  the  merits,  that  all  the  services  as  set  forth  in  their  bill  were 
"of  such  a  nature  as  to  give  no  cause  of  'action  in  any  court  either 
of  common  law  or  equity." 

The  case  was  heard  upon  the  pleadings  and  much  evidence,  A 
part  of  the  evidence  consisted  of  correspondence  between  the  par- 
ties. It  tended  to  prove  that  the  Childs,  father  and  son,  had  been  to 
see  various  members  of  congress,  soliciting  their  influence  in  behalf 

TUBOCKM.CONT. — 16 


242  LEGALITY   OF   OBJECT 

of  a  bill  introduced  for  the  benefit  of  Mr.  Trist,  and  in  several  in- 
stances obtaining  a  promise  of  it.  There  was  no  attempt  to  prove  that 
any  kind  of  bribe  had  been  offered  or  ever  contemplated ;  but  the  fol- 
lowing letter,  one  in  the  correspondence  put  in  evidence,  was  referred 
to  as  showing  the  effects  of  contracts  such  as  the  one  in  this  case: 
"From  Child,  Jr.,  to  Trist.  House  of  Representatives,  Washington, 
D.  C,  Feb.  20th,  1871.    Mr.  Trist:    Everything  looks  very  favorable. 

I  found  that  my  father  has  spoken  to  C and  B ,  and  other 

members  of  the  House.     Mr.  B says  he  will  try  hard  to  get  it 

before  the  House.     He  has  two  more  chances,  or  rather  'morning 

hours,'  before  Congress  adjourns.     A will  go  in  for  it.     D 

promises  to  go  for  it.     I  have  sent  your  letter  and  report  to   Mr. 

W ,  of  Pennsylvania.     It  may  not  be  reached  till   next   week. 

Please  write  to  your  friends  to  write  immediately  to  any  member  of 
Congress.  Every  vote  tells ;  and  a  simple  request  to  a  member  may 
secure  his  vote,  he  not  caring  anything  about  it.  Set  every  man  you 
know  at  work,  even  if  he  knows  a  page,  for  a  page  often  gets  a  vote. 
The  most  I  fear  is  indifference.  Yours,  &c.,  L.  M.  Child." 
The  court  below  decreed : 

1st.  That  Trist  should  pay  to  the  complainant  $3,639,  with  interest 
from  April  20th,  1871. 

2d.  That  until  he  did  so,  he  should  be  enjoined  from  receivmg  at 
the  treasury  "any  of  the  moneys  appropriated  to  him"  by  the  above 
act  of  congress,  of  April  20th,  1871. 

From  this  decree  the  case  was  brought  here. 

The  good  character  of  the  Messrs.  Child,  father  and  son,  was  not 
denied. 

Mr.  Justice  Swayne,**  delivered  the  opinion  of  the  court.     *     *     * 
But  there  is  an  objection  of  still  greater  gravity  to  the  appellee's 
case. 

.Was  the  contract  a  valid  one?  It  was,  on  the  part  of  Child,  to 
procure  by  lobby  service,  if  possible,  the  passage  of  a  bill  providing 
for  the  payment  of  the  claim.  The  aid  asked  by  the  younger  Child  of 
Trist,  which  indicated  what  he  considered  needful,  and  doubtless  pro- 
posed to  do  and  did  do  himself,  is  thus  vividly  pictured  in  his  letter 
to  Trist  of  the  20th  February,  1871.  After  giving  the  names  of  sev- 
eral members  of  congress,  from  whom  he  had  received  favorable  as- 
surances, he  proceeds:  "Please  write  to  your  friends  to  write  to  any 
member  of  congress.  Every  vote  tells,  and  a  simple  request  may  se- 
cure a  vote,  he  not  caring  anything  about  it.  Set  every  man  you  know 
at  work.    Even  if  he  knows  a  page,  for  a  page  often  gets  a  vote." 

In  the  Roman  law  it  was  declared  that  "a  promise  made  to  effect  a 
base  purpose,  as  to  commit  homicide  or  sacrilege,  is  not  binding." 
Just.  Inst.  lib.  3,  tit.  19,  par.  24.    In  our  jurisprudence  a  contract  may 

B  A  portion  of  the  opinion  is  omitted. 


AGKEEMENTS   CONTRARY   TO    PUBLIC   POLICY  243 

be  illegal  and  void  because  it  is  contrary  to  a  constitution  or  statute, 
or  inconsistent  with  sound  policy  and  good  morals.  Lord  Mansfield 
said  (Jones  v.  Randall,  1  Cowp.  39)  :  "Many  contracts  which  are  noc 
against  morality,  are  still  void  as  being  against  the  maxims  of  sound 
policy." 

It  is  a  rule  of  the  common  law  of  universal  application,  that  where 
a  contract  express  or  implied  is  tainted  with  either  of  the  vices  last 
named,  as  to  the  consideration  or  the  thing  to  be  done,  no  alleged  right 
founded  upon  it  can  be  enforced  in  a  court  of  justice. 

Before  considering  the  contract  here  in  question,  it  may  be  well, 
by  way  of  illustration,  to  advert  to  some  of  the  cases  presenting  the 
subject  in  other  phases,  in  which  the  principle  has  been  adversely 
applied. 

Within  the  condemned  category  are:  An  agreement  to  pay  for 
supporting  for  election  a  candidate  for  sheriff,  Swayze  v.  Hull,  8  N. 
J.  Law,  54,  14  Am.  Dec.  399 ;  to  pay  for  resigning  a  public  position  to 
make  room  for  another,  Eddy  v.  Capron,  4  R.  L  395,  67  Am.  Dec. 
541 ;  Parsons  v.  Thompson,  1  H.  Bl,  322 ;  to  pay  for  not  bidding  at 
a  sheriff's  sale  of  real  property,  Jones  v.  Caswell,  3  Johns.  Cas.  (N. 
Y.)  29,  2  Am.  Dec.  134;  to  pay  for  not  bidding  for  articles  to  be  sold 
by  the  government  at  auction,  Doolin  v.  Ward,  6  Johns.  (N.  Y.)  194; 
to  pay  for  not  bidding  for  a  contract  to  carry  the  mail  on  a  specified 
route,  Gulick  v.  Ward,  10  N.  J.  Law,  87,  18  Am.  Dec.  389 ;  to  pay 
a  person  for  his  aid  and  influence  in  procuring  an  office,  and  for  not 
being  a  candidate  himself.  Gray  v.  Hook,  4  N.  Y.  449;  to  pay  for  pro- 
curing a  contract  from  the  government.  Tool  Co.  v.  Norris,  2  Wall. 
45,  17  L.  Ed.  868;  to  pay  for  procuring  signatures  to  a  petition  to 
the  governor  for  a  pardon,  Hatzfield  v.  Gulden,  7  Watts  (Pa.)  152, 
31  Am.  Dec.  750;  to  sell  land  to  a  particular  person  when  the  sur- 
rogate's order  to  sell  should  have  been  obtained.  Overseers  of  Bridge- 
water  v.  Overseers  of  Brookfield,  3  Cow.  (N.  Y.)»299;  to  pay  for 
suppressing  evidence  and  compounding  a  felony,  Collins  v.  Blantern, 
2  Wils.  347 ;  to  convey  and  assign  a  part  of  what  should  come  from 
an  ancestor  by  descent,  devise,  or  distribution,  Boynton  v.  Hubbard, 
7  Mass.  112;  to  pay  for  promoting  a  marriage,  Scribblehill  v.  Brett,  4 
Brown  Pari.  Cas.  144;  Arundel  v.  Trevillian,  1  Ch.  Rep.  47;  to  in- 
fluence the  disposition  of  property  by  will  in  a  particular  way.  Deben- 
ham  v.  Ox,  1  Ves.  276.  See,  also,  Add.  Cont.  91  ;  1  Story,  Eq.  c.  7; 
Collins  V.  Blantern,  1  Smith  Lead.  Cas.  676,  Am.  note. 

The  question  now  before  us  has  been  decided  in  four  American 
cases.  They  were  all  ably  considered,  and  in  all  of  tiicm  the  contract 
was  held  to  be  against  public  policy,  and  void.  Clippingcr  v.  Hey)- 
baugh,  5  Watts  &  S.  (Pa.)  315,  40'Am.  Dec.  519;  Harris  v.  Roofs 
Ex'r,  10  Barb.  (N.  Y.)  489;  Rose  &  Hawley  v.  Truax.  21  Barb. 
(N.  Y.)  361;  Marshall  v.  Railroad  Co.,  16  How.  314.  14  L.  Ed. 
953.     We  entertain  no  doubt  that  in  such  cases,  as  under  all  other 


344  LEGALITY   OF  OBJECT 

circumstances,  an  agreement  express  or  implied  for  purely  profes- 
sional services  is  valid.  Within  this  category  are  included,  drafting 
the  petition  to  set  forth  the  claim,  attending  to  the  taking  of  testimony, 
collecting  facts,  preparing  arguments,  and  submitting  them  orally  or 
in  writing,  to  a  committee  or  other  proper  authority,  and  other  services 
of  like  character.  All  these  things  are  intended  to  reach  only  the  rea- 
son of  those  sought  to  be  influenced.  They  rest  on  the  same  principle 
of  ethics  as  professional  services  rendered  in  a  court  of  justice,  and 
are  no  more  exceptionable.  But  such  services  are  separated  by  a  broad 
line  of  demarcation  from  personal  solicitation,  and  the  other  means 
and  appliances  which  the  correspondence  shows  were  resorted  to  in 
this  case.  There  is  no  reason  to  believe  that  they  involved  anything 
corrupt  or  different  from  what  is  usually  practiced  by  all  paid  lob- 
byists in  the  prosecution  of  their  business. 

The  foundation  of  a  republic  is  the  virtue  of  its  citizens.  They  are 
at  once  sovereigns  and  subjects.  As  the  foundation  is  undermined, 
the  structure  is  weakened.  When  it  is  destroyed,  the  fabric  must  fall. 
Such  is  the  voice  of  universal  history.  1  Montesq.  Spirit  of  Laws,  17. 
The  theory  of  our  government  is,  that  all  public  stations  are  trusts, 
and  that  those  clothed  with  them  are  to  be  animated  in  the  discharge 
of  their  duties  solely  by  considerations  of  right,  justice,  and  the  public 
good.  They  are  never  to  descend  to  a  lower  plane.  But  there  is  a 
correlative  duty  resting  upon  the  citizen.  In  his  intercourse  with  those 
in  authority,  whether  excutive  or  legislative,  touching  the  perform- 
ance of  their  functions,  he  is  bound  to  exhibit  truth,  frankness,  and 
integrity.  Any  departure  from  the  line  of  rectitude  in  such  cases,  is 
not  only  bad  in  morals,  but  involves  a  public  wrong.  No  people  can 
have  any  higher  public  interest,  except  the  preservation  of  their  lib- 
erties, than  integrity  in  the  administration  of  their  government  in  all 
its  departments. 

The  agreement  in  the  present  case  was  for  the  sale  of  the  in- 
fluence and  exertions  of  the  lobby  agent  to  bring  about  the  passage  of 
a  law  for  the  payment  of  a  private  claim,  without  reference  to  its  mer- 
its, by  means  which,  if  not  corrupt,  were  illegitimate,  and  considered 
in  connection  with  the  pecuniary  interest  of  the  agent  at  stake,  con- 
trary to  the  plainest  principles  of  public  policy.  No  one  has  a  right, 
in  such  circumstances,  to  put  himself  in  a  position  of  temptation  to  do 
what  is  regarded  as  so  pernicious  in  its  character.  The  law  forbids 
the  inchoate  step,  and  puts  the  seal  of  its  reprobation  upon  the  under- 
taking. 

If  any  of  the  great  corporations  of  the  country  were  to  hire  adven- 
turers who  make  market  of  themselves  in  this  way,  to  procure  the  pas- 
sage of  a  general  law  with  a  view  to  the  promotion  of  their  private 
interests,  the  moral  sense  of  every  right-minded  man  would  instinc- 
tively denounce  the  employer  and  employed  as  steeped  in  corruption, 
and  the  employment  as  infamous. 


AGREEMENTS   CONTRARY    TO    PUBLIC   POLICY  245 

If  the  instances  were  numerous,  open,  and  tolerated,  they  would  be 
regarded  as  measuring  the  decay  of  the  pubHc  morals  and  the  de- 
generacy of  the  times.  No  prophetic  spirit  would  be  needed  to  fore- 
tell the  consequences  near  at  hand.  The  same  thing  in  lesser  leg- 
islation, if  not  so  prolific  of  alarming  evils,  is  not  less  vicious  in  itself, 
nor  less  to  be  condemned.  The  vital  principle  of  both  is  the  same. 
The  evils  of  the  latter  are  of  sufficient  magnitude  to  invite  the  most 
serious  consideration.  The  prohibition  of  the  law  rests  upon  a  solid 
foundation,  A  private  bill  is  apt  to  attract  little  attention.  It  involves 
no  great  public  interest,  and  usually  fails  to  excite  much  discussion. 
Not  unfrequently  the  facts  are  whispered  to  those  whose  duty  it  is  to 
investigate,  vouched  for  by  them,  and  the  passage  of -the  measure  is 
thus  secured.  If  the  agent  is  truthful,  and  conceals  nothing,  all  is 
well.  If  he  uses  nefarious  means  with  success,  the  spring-head  and 
the  stream  of  legislation  are  polluted.  To  legalize  the  traffic  of  such 
service,  would  open  a  door  at  which  fraud  and  falsehood  would  not 
fail  to  enter  and  make  themselves  felt  at  every  accessible  point.  It 
would  invite  their  presence  and  offer  them  a  premium.  If  the  tempted 
agent  be  corrupt  himself,  and  disposed  to  corrupt  others,  the  transition 
requires  but  a  single  step.  He  has  the  means  in  his  hands,  with  every 
facility  and  a  strong  incentive  to  use  them.  The  widespread  suspicion 
which  prevails,  and  charges  openly  made  and  hardly  denied,  lead  to 
the  conclusion  that  such  events  are  not  of  rare  occurrence.  Where  the 
avarice  of  the  agent  is  inflamed  by  the  hope  of  a  reward  contingent 
upon  success,  and  to  be  graduated  by  a  percentage  upon  the  amount 
appropriated,  the  danger  of  tampering  in  its  worst  form  is  greatly  in- 
creased. 

It  is  by  reason  of  these  things  that  the  law  is  as  it  is  upon  the  sub- 
ject. It  will  not  allow  either  party  to  be  led  into  temptation  where 
the  thing  to  be  guarded  against  is  so  deleterious  to  private  morals  and 
so  injurious  to  the  public  welfare.  In  expressing  these  views,  we  fol- 
low the  lead  of  reason  and  authority. 

We  are  aware  of  no  case  in  English  or  American  jurisprudence  like 
the  one  here  under  consideration,  where  the  agreement  has  not  been 
adjudged  to  be  illegal  and  void. 

We  have  said  that  for  professional  services  in  this  connection  a 
just  compensation  may  be  recovered.  But  where  they  are  blended 
and  confused  with  those  which  are  forbidden,  the  whole  is  a  unit  and 
indivisible.  That  which  is  bad  destroys  that  which  is  good,  and  they 
perish  together.  Services  of  the  later  character,  gratuitously  ren- 
dered, are  not  unlawful.  The  absence  of  motive  to  wrong  is  the 
foundation  of  the  sanction.  The  tendency  to  mischief,  if  not  wanting, 
is  greatly  lessened.  The  taint  lies  in  the  stipulation  for  pay.  Where 
that  exists,  it  affects  fatally,  in  all  its  parts,  the  entire  body  of  the 
contract.  In  all  such  cases,  protior  conditio  defcndcntis.  Wlicre  there 
is  turpitude,  the  law  will  help  neither  party. 


246  LEGALITY  OF  OBJECT 

The  elder  agent  in  this  case  is  represented  to  have  been  a  lawyer  of 
abiHty  and  high  character.  The  appellee  is  said  to  be  equally  worthy. 
This  can  make  no  difference  as  to  the  legal  principles  we  have  con- 
sidered, nor  in  their  application  to  the  case  in  hand.  The  law  is  no 
respecter  of  persons. 

Decree  reversed,  and  the  case  remanded,  with  directions  to  dismiss 
the  bill. 


2.  Agreements  Promotive  of  Nonofficial  Corruption 


LIVINGSTON  V.  PAGE. 

(Supreme  Court   of  Verinout,   1902.     74   Vt.   356.   52   Atl.   965.   59  L.   R.   A. 
336,  93  Am.  St.  Rep.  901.) 

Action  of  assumpsit  by  James  H.  Livingston  against  Carrol  S. 
Page.  From  a  judgment  for  the  defendant,  the  plaintiff  brings  ex- 
ceptions. 

MuNSON,  J.  At  the  close  of  the  plaintiff's  evidence  the  defendant 
moved  that  a  verdict  be  directed  in  his  favor,  on  the  ground  that 
the  contract  claimed  by  the  plaintiff  was  void,  as  against  public 
policy.  The  court  held  the  contract  void  for  the  reason  assigned, 
and  directed  a  verdict  accordingly.  The  case  is  here  upon  the  plain- 
tiff's exception  to  this  holding. 

The  plaintiff  called  the  defendant  as  a  witness.  The  evidence  con- 
sisted of  certain  correspondence  had  by  the  parties ;  and  the  testimo- 
ny of  the  parties  as  to  the  circumstances  in  which  the  letters  were 
written,  the  meaning  that  was  attached  to  the  language  used,  the 
matters  inclosed  for  publication  by  one  party  and  the  services  ren- 
dered by  the  other,  and  subsequent  transactions  bearing  upon  their 
understanding  of  the  relations  they  had  sustained.  The  defendant 
claimed  that  no  contract  with  the  plaintiff  was  in  fact  consummated, 
and  that  only  contract  ever  contemplated  was  one  for  the  publication 
of  extracts  from  other  papers  at  a  legitimate  charge  for  the  space 
actually  taken.  The  plaintiff  did  not  claim  to  recover  on  this  ground, 
but  claimed  to  recover  a  reasonable  compensation  for  the  support  and 
influence  of  his  paper  and  his  services  as  its  editor. 

The  plaintiff  was  a  Democrat,  publishing  a  Democratic  paper  of 
independent  proclivities.  The  defendant  was  a  Republican,  seeking 
a  nomination  to  congress  from  a  Republican  convention.  It  appeared 
trom  the  plaintift''s  testimony  that  he  considered  defendant's  pro- 
posal an  application  for  the  use  and  influence  of  his  paper  in  the  na- 
ture of  a  retainer;    that  he  accepted  it  with  the  understanding  that 


AGREEMENTS  CONTRARY  TO  PUBLIC  POLICY  2i7 

his  paper  and  his  services  as  editor  would  be  at  the  command  of  the 
defendant  during  the  campaign  to  be  settled  for  at  its  close;  that  he 
was  to  do  all  he  could  to  influence  the  choice  of  delegates  and  secure 
the  defendant's  nomination ;  that  original  matter  was  within  the 
scope  of  his  contract,  and  that  his  editorials  were  written  in  that  view ; 
that  he  supported  defendant  because  of  this  contract  and  the  money 
he  was  to  get  out  of  it ;  that  he  expected  to  receive  a  larger  compen- 
sation if  defendant  was  nominated  than  he  otherwise  would ;  thai 
he  tried  to  conceal  his  relations  with  the  defendant  from  the  public, 
and  understood  that  the  defendant  was  trying  to  do  the  same;  that 
he  took  this  course  because  it  would  make  his  efforts  in  influencing 
voters  in  defendant's  behalf  more  successful. 

The  case  of  Nichols  v.  Mudgett,  32  Vt.  546,  decided  by  this  court 
in  1860,  is  one  of  the  few  cases  bearing  upon  this  subject.  The  plain- 
tiff in  that  case  was  a  candidate  for  the  office  of  town  representative, 
and  a  creditor  of  the  defendant.  The  defendant's  party  affiliations 
were  such  as  would  naturally  lead  him  to  vote  for  the  opposing  can- 
didate. Conversations  were  had  which  resulted  in  a  mutual  under- 
standing that  the  defendant  should  use  his  influence  in  favor  of  the 
plaintiff's  election,  and  that,  if  the  plaintiff  was  successful,  the 
defendant's  indebtedness  should  be  treated  as  paid.  Induced  by  this 
agreement,  the  defendant  supported  the  plaintiff's  candidacy  until  his 
election  was  declared.  There  was  no  agreement  that  defendant 
should  vote  for  the  plaintiff  unless  it  was  implied  in  the  above  un- 
derstanding. He  voted  for  the  plaintiff,  however,  and  did  so  because 
of  the  understanding.  The  suit  was  for  the  recovery  of  the  indebted- 
ness referred  to,  and  the  defendant  claimed  that  it  had  been  satisfied. 
The  court  considered  that  there  was  a  sale  of  the  defendant's  influ- 
ence and  vote,  held  the  agreement  void,  and  gave  judgment  for  the 
plaintiff.  The  agreement  in  that  case  involved  both  the  defendant's 
vote  and  his  influence  upon  the  votes  of  others,  but  the  court's  dis- 
cussion of  the  subject  does  not  leave  much  doubt  as  to  what  its  con- 
clusion would  have  been  if  the  undertaking  had  been  confined  to 
the  latter  service.  Certainly  no  distinction  could  properly  be  made 
between  the  two.  But  that  contract  had  reference  to  the  votes  to 
be  cast  at  an  election,  and  the  plaintiff  contends  that,  inasmuch  as 
caucauses  and  conventions  are  not  creations  of  the  law,  contracts  for 
services  in  influencing  the  choice  of  delegates  and  the  action  of  a  con- 
vention cannot  be  considered  against  public  policy. 

In  L^iness  v.  Hesing,  44  111.  113,  92  Am.  Dec.  153,  the  contract 
was  for  services  of  this  character.  It  is  suggested  that  there  may 
have  been  a  law  in  that  state  regulating  primaries,  but  there  is  no 
intimation  of  one  in  the  opinion,  anfl  we  have  found  none  in  the  ex- 
amination we  have  been  able  to  make.  There  the  plaintiff  sent  (he 
defendant  $20,  with  a  rerjuest  that  he  use  his  influence  to  get  plain- 
tiff nominated   for  a  certain  oflice,  and  a  direction  to  call  ui)on  him 


248  LEGALITY   OF   OBJECT 

for  $20  more  if  he  got  the  nomination.  The  defendant  kept  the  $20, 
and  aided  the  plaintiff's  opponent.  The  suit  was  to  recover  this  mon- 
ey, but  the  defendant  had  judgment.  The  decision  was  announced 
by  Justice  Lawrence,  who  characterized  the  transaction  as  "an  at- 
tempt to  influence,  by  moneyed  considerations,  the  action  of  the  de- 
fendant in  a  matter  where  every  person  should  be  governed  solely  by 
a  regard  for  the  public  welfare." 

In  Strasburger  v.  Burk,  13  Am.  Law  Reg.  (N.  S.)  607,  decided  by 
the  city  court  of  Baltimore,  the  defendant  was  the  keeper  of  a  lager 
beer  saloon,  and  agreed  to  give  his  p'olitical  influence  and  furnish 
beer  and  cigars  to  secure  a  caucus  nomination  for  the  plaintiff's  fa- 
ther. The  gratuitous  furnishing  of  food  or  liquor  to  secure  votes  at 
an  election  was  prohibited  by  the  Code,  but  the  only  statutory  recog- 
nition of  primary  elections  was  a  provision  for  the  preservation  of 
order.  The  court  considered  that  in  applying  the  principles  of  public 
policy  no  distinction  could  be  made  between  voluntary  meetings  of  this 
character  and  elections  ordained  by  law.  Mr.  McCrary  adopts  the  con- 
clusions of  this  opinion  in  his  work  on  Elections,  and  applies  the 
doctrine  to  the  sale  of  influence,  as  well  as  the  sale  of  votes.  Mr.  Red- 
field,  in  commenting  upon  the  same  opinion  in  13  Am.  Law  Reg.  (N. 
S.)  at  page  610,  says  that  the  invalidity  of  contracts  designed  to  con- 
trol the  freedom  of  elections  results  from  the  principles  of  common 
law,  and  that  those  relating  to  caucuses  cannot  be  made  an  exception 
on  the  ground  that  such  meetings  are  not  recognized  by  the  statute. 

We  cannot  doubt  the  correctness  of  this  conclusion.  The  rule 
would  largely  fail  of  its  purpose  if  not  so  applied.  When  the  voters 
are  unevenly  divided  into  two  parties,  the  nomination  of  the  stronger 
organization  is  usually  equivalent  to  an  election.  And  when  party 
action  is  less  decisive  the  subsequent  efforts  of  the  voters  are  ordina- 
rily confined  to  a  selection  from  the  candidates  regularly  presented. 
The  individual  voter  of  a  large  electorate  can  seldom  give  an  effective 
expression  to  a  choice  that  is  not  in  line  with  the  action  of  some  par- 
ty convention.  To  secure  a  free  and  exact  expression  of  the  sov- 
ereign will,  there  must  be  a  proper  selection  of  candidates,  as  well 
as  an  honest  election.  If  the  choice  of  delegates  and  the  action  of 
the  nominating  convention  are  improperly  determined,  the  election 
ballots  will  fail  to  express  the  real  judgment  of  the  voters. 

It  is  not  claimed  in  argument,  and  no  ground  occurs  to  us  upon 
which  it  could  be  claimed,  that  this  contract  was  any  the  less  ob- 
noxious to  the  law  because  the  purchased  influence  was  to  be  exerted 
through  the  columns  of  the  plaintiff's  paper.  A  newspaper  is  under- 
stood to  present  the  views  of  some  one  connected  with  its  manage- 
ment or  views  deemed  consistent  with  some  settled  policy,  and  has 
a  patronage  and  influence  which  are  due  to  that  understanding.  As 
long  as  the  editorial  column  is  relied  upon  as  a  public  teacher  and 
adviser,  there  can  be  no  more  dangerous  deception  than  that  resulting 
from  the  secret  purchase  of  its  favor.     We  hold  that  the  contract 


AGREEMENTS   CONTRARY   TO   PUBLIC   POLICY  249 

testifiedl  to  and  relied  upon  by  the  plaintiff  is  contrary  to  public  policy, 
and  therefore  void. 
Judgment  afhrmed. 

Note. — Since  the  delivery  of  the  above  opinion,  we  have  seen  Fitch 
V.  De  Young,  66  Cal.  339,  5  Pac.  364,  where  it  was  held,  upon  views 
similar  to  those  expressed  in  concluding  the  opinion,  that  an  article 
charging  a  publisher  with  selling  the  support  and  advocacy  of  his 
paper  for  money  is  libelous. 


3.  Agreements  Tending  to  Pervert  or  Obstruct  Public  Justice 
(A)  Compounding  Crime 


JONES  V.  RICE. 

(Supreme  Judicial  Court  of  Massacliusetts,  1837.     18  Pick.  440, 
29  Am.   Dec.  612.) 

Assumpsit  on  a  promissory  note,  dated  January  1st,   1835.  made 
by  the  defendant  to  the  plaintiff,  for  $147. 

At  the  trial,  before  Shaw,  C.  J.,  it  appeared  that  on  the  night  of 
December  31st,  1834,  a  ball  was  given  at  the  house  of  Joel  Jones,  in 
Sudbury;  that  an  attempt  was  made  by  the  defendant  and  others,  to 
interrupt  the  ball  by  violence;  that  a  riot  ensued,  in  which  some  in- 
jury was  done  to  J.  Jones  and  others,  assembled  at  the  ball ;  that  a 
complaint  was  filed  before  a  justice  of  the  peace  and  a  warrant  issued 
by  him  against  some  of  the  rioters ;  that  the  persons  assembled  at  the 
ball  chose  a  committee  to  report  on  the  terms  which  should  be  pro- 
posed to  the  accused,  for  a  settlement  of  the  diflficulty ;  that  the  com- 
mittee reported  that  the  accused  should  pay  the  sum  of  $184;  that 
of  this  amount  the  sum  of  $40  was  for  damages  sustained  by  three 
individuals,  $10  for  the  services  of  the  officer,  and  $2  for  the  serv- 
ices of  the  magistrate,  and  that  the  balance  was  for  the  purpose  of 
stopping  that  and  other  prosecutions ;  that  it  was  thereupon  voted  by 
those  assembled  at  the  ball,  that  if  the  accused  would  pay  the  sum 
proposed  or  give  security  for  it,  the  other  party  wouUl  do  nothing 
more  about  the  matter ;  that  the  accused  agreed  to  the  terms  and  paid 
about  $40,  and  the  defendant,  at  their  request,  gave  the  note  in  suit 
for  the  balance;  that  J.  Jones  and  others,  including  the  plaintiff,  then 
signed  a  receipt  "in  full  for  all  damages  sustained  by  the  hall  party 
assembled,  &c.  and  all  other  demands  of  any  name  or  nature  of  said 
ball  party";  and  that  in  consequence  of  this  arrangement  the. officer 
made  no  return  of  the  warrant,  and  no  further  proceedings  were  had 
upon  the  complaint. 


250  LEGALITY  OF  OBJECT 

The  Chief  Justice  was  of  opinion,  that  the  plaintiff  was  not  en- 
titled to  recover,  because  the  evidence  proved  a  want  of  consideration 
or  a  bad  consideration  for  the  note ;  and  the  plaintiff  consented  to 
a  nonsuit,  subject  to  the  opinion  of  the  whole  court. 

Putnam,  J.  delivered  the  opinion  of  the  court.  The  facts  reported 
disclose,  that  divers  persons  committed  an  aggravated  riot  and  as- 
sault upon  the  plaintiff  and'  others,  and  that  the  note  was  given  partly 
for  the  damages  and  expenses  which  the  plaintiff  and  others  had  sus- 
tained, and  partly  for  their  agreement  no  further  to  prosecute  for  the 
oft'ence  against  the  public.  The  sum  oi  $52  was  given  for  the  dam- 
ages and  expenses,  and  $132  for  the  compounding  of  the  misdemean- 
or; part  was  paid  in  money,  and  the  balance  was  secured  by  the 
note  now  sued. 

Cases  have  been  cited  from  the  English  authorities  which  sustain 
the  distinction  between  considerations  arising  from  the  compound- 
ing of  felonies,  which  is  admitted  to  be  illegal,  and  the  compounding 
of  misdemeanors  which  is  alleged  to  be  lawful ;  but  it  appears  that 
there  is  a  conflict  in  the  decisions  upon  this  matter.  In  Drage  v. 
Ibberson,  2  Esp.  643,  Lord  Kenyon  held,  that  the  consideration  for 
settling  a  misdemeanor  was  good  in  law.  And  the  case  of  Fallowes 
V.  Taylor,  7  Term  R.  745,  proceeds  upon  the  same  principle.  It  was 
there  held  by  Lord  Kenyon  and  the  rest  of  the  court,  that  a  bond! 
given  to  the  plaintiff  (who  was  clerk  of  the  quarter  sessions  and  who 
was  directed  to  prosecute  the  defendant  for  a  public  nuisance,)  con- 
ditioned to  remove  the  nuisance,  was  valid,  notwithstanding  it  was 
taken  by  the  plaintiff  for  his  own  use,  he  agreeing  not  to  prosecute 
for  the  nuisance. 

We  do  not  think,  that  such  a  power  is  vested  in  individuals.  It 
would  enable  them  to  use  the  claim  of  the  government  for  their  own 
emolument,  and  greatly  to  the  oppression  of  the  people.  It  has  a 
direct  tendency  to  obstruct  the  course  of  the  administration  of  jus- 
tice; and  the  mischief  extends,  we  think,  as  well  to  misdemeanors 
as  to  felonies.  1  Russ.  Crimes,  210;  Edgcombe  v.  Rodd,  5  East, 
301. 

The  power  to  stop  prosecutions  is  vested  in  the  law  officers  of  the 
commonwealth,  who  use  it  with  prudence  and  discretion.  If  it  were 
given  to  the  party  injured,  who  might  be  the  only  witness  who  could 
prove  the  offence,  he  might  extort  for  his  own  use,  money  which  prop- 
erly should  be  levied  as  a  fine  upon  the  criminal  party  for  the  use  of 
the  commonwealth.  The  case  at  bar  furnishes  a  strong  illustration 
of  the  illegality  of  such  a  proceeding.  The  plaintiff  claimed  and  got  the 
note  to  secure  to  his  own  use  four  times  as  much  as  in  his  own  estima- 
tion his  individual  damage  amounted  to.  Now  the  sum  thus  secured 
might  be  more  or  less  than  the  rioters  would  have  been  fined  ;  but 
whether  more  or  less  is  altogether  immaterial;  for  no  part  of  it  be- 
longed to  the  party.     He  might  settle  for  his  own  damage  from  the 


AGREEMENTS   CONTKART   TO    PUBLIC   POLICY  251 

riot;  but  it  would  enable  the  party  to  barter  away  the  public  right 
for  his  own  emolument,  if  we  were  to  hold  that  the  consideration  of 
this  note  was  lawful. 

We  are  all  of  opinion  that  the  nonsuit  must  stand. 


(B)  Reference  to  Arbitration 


HAMILTON  V.  LIVERPOOL  &  LONDON  &  GLOBE  INS.  CO. 

(Supreme  Court  of  the  United  States,  1890.     13G  U.  S.  242,  10  Sup.  Ct. 
945,  34  L.  Ed.  419.) 

In  error  to  the  circuit  court  of  the  United  States  for  the  southern 
district  of  Ohio. 

This  was  an  action  upon  a  policy  of  insurance  numbered  2,907,224, 
against  fire,  for  a  year  from  September  5,  1885,  upon  a  stock  of 
tobacco  in  the  plaintiff's  warehouse  at  413  and  415  Madison  street, 
in  Covington,  in  the  state  of  Kentucky.  Among  the  printed  "condi- 
tions relating  to  the  methods  of  adjustment  of  loss,  and  the  payment 
thereof,"  were  the  following: 

The  tenth   condition,   after  provisions   relating  to  proofs  of   loss, 
certificate  of  a  magistrate,   submission  to  examination  on  oath,  and 
production  of  books  and  vouchers,  and  certified  copies  of  lost  bills 
and   invoices,    further   provided:     "When    property    is   damaged,    the 
assured  shall  forthwith  cause  it  to  be  put  in  order,  assorting  and  ar- 
ranging the  various  articles  according  to  their  kinds,  separating  the 
damaged   from  the  undamaged,  and  shall  cause  an  inventory  to  be 
made  and  furnished  to  the  company  of  the  whole,  naming  the  quan- 
tity, quality,  and  cost  of  each  article.    The  amount  of  sound  value,  and 
of  the  loss  or  damage,  shall  be  determined  by  agreement  between  the 
company  and  the  assured.    But  if,  at  any  time,  differences  shall  arise 
as  to  the  amount  of  any  loss  or  damage,  or  as  to  any  question,  matter, 
or  thing  concerning  or  arising  out  of  this  insurance,  every  such  dif- 
ference shall,  at  the  written  request  of  either  party,  be  submitted, 
at  equal  expense  of  the  parties,  to  competent  and  impartial  persons, 
one  to  be  chosen  by  each  party,  and  the  two  so  chosen  shall  select  an 
umpire  to  act  with  them  in  case  of  their  disagreement,  and  the  award 
in  writing  of  any  two  of  them  shall  be  binding  and  conclusive  as  to 
the  amount  of  such  loss  or  damage,  or  as  to  any  question,  matter, 
or  thing  so  submitted,  but  shall  not  decide  the  liability  of  this  com- 
pany;   and,  until  such  proofs,  declarations,  and  ccrtincates  arc  pro- 
duced, and  examinations  and  appraisals  permitted,  the  loss  shall  not 
be  payable.     There  can  be  no  abandonment  to  the  company  of  the 


252  LEGALITY   OF   OBJECT 

property  insured,  but  the  company  reserve  the  right  to  take  the 
whole,  or  any  part  thereof,  at  its  appraised  value." 

By  the  eleventh  condition,  "it  is,  furthermore,  hereby  expressly 
provided  and  mutually  agreed  that  no  suit  or  action  against  this  com- 
pany for  the  recovery  of  any  claim  by  virtue  of  this  policy  shall  be 
sustainable  in  any  court  of  law  or  chancery  until  after  an  award  shall 
have  been  obtained  fixing  the  amount  of  such  claim  in  the  manner 
above  provided." 

The  answer  put  in  issue  the  amount  of  loss,  and  set  up  that  the 
plaintiff  had  not  performed  the  conditions  of  the  policy  on  his  part, 
but  had  refused  to  submit  a  difference  between  the  parties  as  to  the 
amount  of  loss  to  appraisal  and)  award  as  provided  in  the  policy,  and, 
against  the  defendant's  protest,  had  sold  the  property  insured,  and 
deprived  the  defendant  of  its  right  under  the  policy  to  have  an  ap- 
praisal made,  and  to  take  the  property,  or  any  part  thereof,  at  its 
appraised  value,  and  had  thereby  waived  the  right  to  recover  under 
the  policy. 

At  the  trial  the  plaintiff  offered  evidence  tending  to  prove  the  ex- 
ecution of  the  policy,  a  loss  by  fire  on  April  16,  1886,  occasioned  by 
the  tobacco  becoming  saturated  and  impregnated  with  smoke,  and 
thereby  greatly  damaged,  and  proofs  of  loss  in  accordance  with  the 
policy.  The  only  other  evidence  introdticed  was  a  correspondence 
between  the  parties  at  Cincinnati,  the  material  parts  of  which  were 
as  follows:    [Correspondence  omitted.] 

The  court,  after  the  case  had  been  argued,  instructed  the  jury  that 
it  appeared  from  the  evidence  that  the  defendant  requested  the  plain- 
tiff, in  writing,  to  submit  the  amount  of  his  loss  or  damage  under  the 
policy  to  competent  and  impartial  persons,  and  the  plaintiff  refused 
so  to  do,  and  instructed  the  jury  to  return  a  verdict  for  the  defend- 
ant, which  was  accordingly  rendered.  The  plaintiff  excepted  to  these 
instructions,  and  after  judgment  on  the  verdict  sued  out  this  writ 
of  error.° 

Mr.  Justice  Gray,  after  stating  the  facts  as  above,  delivered  the 
opinion  of  the  court. 

The  conditions  of  the  policy  in  suit  clearly  and  unequivocally  man- 
ifest the  intention  and  agreement  of  the  parties  to  the  contract  of  in- 
surance that  any  difference  arising  between  them  as  to  the  amount 
of  loss  or  damage  of  the  property  insured  shall  be  submitted,  at  the 
request  in  writing  of  either  party,  to  the  appraisal  of  competent  and 
impartial  persons,  to  be  chosen  as  therein  provided,  whose  award 
shall  be  conclusive  as  to  the  amount  of  such  loss  or  damage  only, 
and  shall  not  determine  the  question  of  the  liability  of  the  company ; 
that  the  company  shall  have  the  right  to  take  the  whole  or  any  part 
of  the  property  at  its  appraised  value  so  ascertained ;  and  that  until 
such  an  appraisal  shall  have  been  permitted,  and  such  an  award  ob- 

0  The  statement  of  facts  Is  abridged. 


AGREEMENTS    CONTRARY   TO    PUBLIC   POLICY  253 

tained,  the  loss  shall  not  be  payable,  and  no  action  shall  He  against 
the  company.  The  appraisal,  when  requested  in  writing  by  either 
party,  is  distinctly  made  a  condition  precedent  to  the  payment  of  any 
loss,  and  to  the  maintenance  of  any  action.  Such  a  stipulation,  not 
ousting  the  jurisdiction  of  the  courts,  but  leaving  the  general  ques- 
tion of  liability  to  be  judicially  determined,  and  simply  providing  a 
reasonable  method  of  estimating  and  ascertaining  the  amount  of  the 
loss,  is  unquestionably  valid,  according  to  the  uniform  current  of  au- 
thority in  England  and  in  this  country.  Scott  v.  Avery,  5  H.  L.  Cas. 
811;  Viney  v.  Bignold,  20  Q.  B.  Div.  172;  Delaware  &  Hudson 
Canal  Co.  v.  Pennsylvania  Coal  Co.,  50  N.  Y.  250;  Reed  v.  Insur- 
ance Co.,  138  Mass.  572,  576;  Wolff  v.  Insurance  Co.,  50  N.  J.  Law, 
453,  14  Atl.  561;  Hall  v.  Insurance  Co.,  57  Conn.  105,  114,  17  Atl. 
356. 

The  case  comes  within  the  general  rule  long,  ago  laid  down  by  this 
court :  "Where  the  parties,  in  their  contract,  fix  on  a  certain  mode 
by  which  the  amount  to  be  paid  shall  be  ascertained,  as  in  the  pres-' 
ent  case,  the  party  that  seeks  an  enforcement  of  the  agreement  must 
show  that  he  has  done  everything  on  his  part  which  could  be  done 
to  carry  it  into  effect.  He  cannot  compel  the  payment  of  the  amount 
claimed  unless  he  shall  procure  the  kind  of  evidence  required  by  the 
contract,  or  show  that  by  time  or  accident  he  is  unable  to  do  so." 
U.  S.  V.  Robeson,  9  Pet.  319,  327,  9  L.  Ed.  142.  See,  also.  Railroad 
Co.  V.  March,  114  U.  S.  549,  5  Sup.  Ct.  1035,  29  L.  Ed.  255. 

Upon  the  evidence  in  this  case,  the  question  whether  the  defend- 
ant had  duly  requested,  and  the  plaintiff  had  unreasonably  refused, 
to  submit  to  such  an  appraisal  and  award  as  the  policy  called  for, 
did  not  depend  in  any  degree,  as  in  Uhrig  v.  Insurance  Co.,  101  N. 
Y.  362,  4  N.  E.  745,  cited  for  the  plaintiff,  on  oral  testimony  or  ex- 
trinsic facts,  but  wholly  upon  the  construction  of  the  correspondence 
in  writing  between  the  parties,  presenting  a  pure  question  of  law 
to  be  decided  by  the  court.  Turner  v.  Yates,  16  How.  14,  23,  14  L. 
Ed.  824;  Bliven  v.  Screw  Co.,  23  How.  420,  433,  16  L.  Ed.  510; 
Smith  v.  Faulkner,  12  Gray  (Mass.)  251.  That  correspondence  clear- 
ly shows  that  the  defendant  explicitly  and  repeatedly,  in  writing,  re- 
quested that  the  amount  of  the  loss  or  damage  should  be  submitted 
to  appraisers,  in  accordance  with  the  terms  of  the  policy,  and  that 
the  plaintiff  as  often  peremptorily  refused  to  do  this,  unless  the  de- 
fendant would  consent  in  advance  to  define  the  legal  powers  and 
duties  of  the  appraisers,  which  the  defendant  was  under  no  obliga- 
tion to  do,  and  that  the  plaintiff  throughout,  against  the  constant 
protest  of  the  defendant,  asserted,  and  at  last  exercised,  a  right  to  sell 
the  property  before  the  completion  of  an  award  according  to  the 
policy,  thereby  depriving  the  defendant  of  the  right,  reserved  to  it 
by  the  policy,  of  taking  the  properly  at  its  appraised  value,  when  as- 
certained in  accordance  with  the  conditions  of  the  policy. 

The  court  therefore  rightly  instructed  the  jury  that  the  defendant 


254  LEGALITY   OF  OBJECT 

had  requested  in  writing,  and  the  plaintiff  had  declined,  the  appraisal 
provided  for  in  the  policy,  and  that  the  plaintiff,  therefore,  could 
not  maintain  this  action.  If  the  plaintiff  had  joined  in  the  appoint- 
ment of  appraisers,  and  they  had  acted  unlawfully,  or  had  not  acted 
at  all,  a  different  question  would  have  been  presented.  Judgment  af- 
firmed. 


4,  Encouragement  of  Litigation — Champerty  and  Maintenance 


THOMPSON  et  al.  v.  REYNOLDS. 
(Supreme  Court  of  Illinois,  1S74.     73  111.  11.. 

Walker,  J.  Some  time  in  the  latter  part  of  the  year  1868,  appellee 
and  his  partner  were  consulted  by  appellants  as  to  whether  they  should 
execute  a  release,  without  consideration,  of  certain  property  mentioned 
in  the  deed.  The  partner  advised  that  they  had  no  interest,  and  could 
do  so  without  prejudice  to  their  rights;  but,  subsequently,  another 
quitclaim  deed  was,  in  like  manner,  presented  for  a  large  amount  of 
property.  Appellee  was  then  applied  to  for  further  advice,  when  he, 
with  appellant  Charles  Thompson,  consulted  with  one  James  Dunne, 
also  an  attorney,  who  occupied  the  same  office  with  appellee.  They 
investigated  the  matter,  and  arrived  at  the  conclusion  that  appellants 
had  an  interest  in  the  property. 

An  agreement  was  soon  after  entered  into  between  appellants  and 
appellee,  by  which  appellee  was  to  institute  all  necessary  proceedings 
to  ascertain  and  fix  the  rights  of  appellants ;  that  he  should  pay  all 
necessary  expenses,  and  receive  one-half  of  whatever  should  be  real- 
ized. Appellants  agreed  that  they  would  do  no  act  to  interfere  with 
the  proceedings.  It  is  claimed  that,  with  the  consent  of  the  parties, 
appellee  agreed  with  Dunne  he  should  assist  in  prosecuting  the  claims, 
for  which  he  was  to  receive  one-half  of  appellee's  moiety,  being  one- 
fourth  of  what  should  be  recovered. 

Soon  after,  proceedings  were  commenced  in  the  circuit,  the  superior 
and  the  county  courts  by  these  attorneys.  During  the  continuance  of 
these  proceedings,  it  is  claimed  that  about  $10,000  was  realized  by  ap- 
pellants executing  the  releases,  by  way  of  compromise,  with  several 
defendants  to  the  various  suits,  and  it  is  claimed  that  these  proceeds 
were  divided  according  to  the  terms  of  the  agreement. 

About  the  month  of  May,  1871,  appellants,  it  is  claimed,  without 
the  consent  of  appellee  or  of  Dunne,  terminated  the  several  proceed- 
ings and  conveyed  the  lands  in  litigation,  in  consideration  of  $7,500 
actually  paid  to  them,  and  to  recover  one-half  of  that  sum  this  action 
was  brought.    A  trial  by  the  court  and  a  jury  was  had,  resulting  in  a 


AGREEMENTS   COXTRART   TO    PUBLIC    POLICY  255 

verdict  of  $1,500  in  favor  of  plaintiff,  on  which  a  judgment  was  ren- 
dered, and  this  appeal  prosecuted. 

A  number  of  errors  are  assigned  on  the  record,  but  in  the  view  we 
take  of  the  case,  we  shall  only  consider  whether  the  judgment  is 
against  the  law.  The  court  was  asked  to  instruct  the  jury  that  the 
agreement  entered  into  was  champertous  and  void,  but  the  court  below 
refused  to  give  the  instruction.  Blackstone  defines  champerty  (volume 
4,  p.  135)  as  "species  of  maintenance,  and  punished  in  the  same  man- 
ner, being  a  bargain  with  a  plaintiff'  or  defendant  campum  partire,  to 
divide  the  land  or  other  matter  sued  for  between  them,  if  they  prevail 
at  law,  whereupon  the  champerter  is  to  carry  on  the  party's  suit  at 
his  own  expense."  The  same  author  informs  us  that  the  punishment, 
if  a  common  person,  for  champerty,  was  by  fine  and  imprisonment; 
and  this  was  a  misdemeanor,  punishable  at  the  common  law.  See  1 
Hawk.  P.  C.  p.  463.  It  was  also  prohibited  by  various  ancient  stat- 
utes, commencing  as  early  as  the  Statute  of  Westm.  I.  c.  25,  all  of 
which  enact  heavy  penalties  for  their  violation. 

It  thus  appears,  that  champerty  was  an  offense  at  the  common  law, 
and  our  general  assembly  having  adopted  the  common  law  of  England 
as  the  rule  of  decision,  so  far  as  applicable  to  our  condition,  until 
modified  or  repealed  this  must  be  regarded  as  in  force  in  this  state, 
as  aft'ecting  all  such  contracts,  and  as  being  opposed  to  sound  public 
policy.  It  is  certainly  applicable  to  our  condition  so  far  as  it  relates 
to  attorney  and  client,  and  contracts  with  intermeddlers  and  specula- 
tors in  apparently  defective  titles  to  property.  If  allowed  to  be  prac- 
ticed by  attorneys,  it  would  give  them  an  immense  advantage  over  a 
client.  The  superior  knowledge  of  the  attorney  of  the  rights  of  the 
client  would  give  him  the  means  of  oppression  and  acquiring  great 
and  dishonest  advantages  over  the  ignorant  and  unsuspecting  owner 
of  property.  By  giving  false  advice,  the  attorney,  owing  to  the  con- 
fidence his  client  reposes  in  him,  and  to  his  superior  knowledge,  would 
have  the  client  completely  at  his  mercy,  and  would  thus  be  enabled  to 
acquire  the  client's  property  in  the  most  dishonorable  manner.  To 
allow  champerty  would  be  to  permit  temptation  to  the  avaricious  and 
unscrupulous  in  the  profession,  that  would,  from  the  very  nature  of 
things,  lead  to  great  abuse  and  oppression. 

Whilst  the  great  body  of  the  profession  are  honest,  and  understand 
and  act  on  the  duties  devolving  upon  them,  there  necessarily  must  be, 
in  this  as  in  all  ages  of  the  past,  some  who  gain  admission  that  have 
neither  the  integrity  nor  sense  of  duty  necessary  to  restrain  them  from 
dishonorable  means  in  practice.  Usually  a  person  will  not  employ  an 
attorney  unless  he  feels  assured  of  his  honesty  as  a  man  as  well  as 
his  ability  as  an  attorney.  Having  this  confidence,  all  must  see  at  a 
glance  that  it  would  give  the  attorney  immense  power  over  tlie  client, 
and  with  this  power  all  must  see  that  to  permit  him  to  make  cham- 
pertous contracts  would  be  to  place  the  client  in  the  power  of  the  at- 
torney.   Professional  duty  requires  that  advice  given  should  be  honest. 


256  LEGALITY   OP   OBJECT 

fair  and  unreserved ;  but  where  the  weak  in  morals  or  the  vicious  are 
consulted,  and  they  see  and  determine  to  embrace  the  opportunity  to 
make  a  champertous  contract,  how  can  we  expect  them  to  give  fair, 
honest  and  unreserved  advice  at  the  commencement,  or  in  conducting 
the  litigation?  The  just,  the  good  and  upright  require  no  restraints, 
but  the  vicious  or  immoral  should  be  freed  from  temptation. 

At  all  times,  in  the  past,  champerty  has  been  found  a  source  of  op- 
pression and  wrong  to  the  property  owner,  and  a  great  annoyance  to 
the  community.  To  allow  it  to  attorneys,  with  a  portion,  but  it  is 
believed  the  number  would  be  small,  there  would  be  strong  temptation 
to  annoy  others  by  the  commencement  of  suits  without  just  claim  or 
right,  merely  to  extort  money  from  the  defendant  in  buying  his  peace. 
Such  practices  have  been  denominated  as  a  crime  malum  in  se.  And 
such  extortion  from  others,  or  by  the  oppression  of  a  client,  is  unques- 
tionably a  great  moral  delinquency,  that  no  government  regardful  of 
the  rights  of  its  citizens  should  ever  tolerate.  We  see  that  it  is  as  liable 
now  to  abuse  as  it  ever  was,  and  would  be  as  injurious  to  our  com- 
munity as  to  other  communities  in  the  past.  And  this  court  has  re- 
peatedly held  that  common  law  misdemeanors  may  be  punished  in  this 
state,  unless  abrogated  by  statutory  enactment. 

Then,  has  this  common  law  offense  been  repealed?  We  think  not. 
The  general  assembly  has  defined  the  offenses  of  barratry  and  main- 
tenance, but  the  offense  of  champerty  is  not  named;  and  as,  at  com- 
mon law,  all  three  of  these  oft'enses  were  regarded  as  separate  and  dis- 
tinct, and  as  the  British  parliament  enacted  separate  laws  in  reference 
to  each,  and  as  they  were  enforced  by  distinct  proceedings,  we  may 
regard  them  as  different  offenses,  although  champerty  is  said  to  be  a 
species  of  maintenance.  Then,  if  the  108th  section  of  the  Criminal 
Code  would  not  embrace  this  offense,  it  is  in  force  as  a  common  law 
misdemeanor,  and  we  do  not  see  that  it  does. 

But,  it  is  said  that  the  case  of  Newkirk  v.  Cone,  18  111.  449,  has 
determined  that  there  is  no  law  in  this  state  against  champerty,  but 
this  is  manifestly  a  mistake.  In  that  case  there  seems,  at  first,  to  have 
been  a  champertous  agreement,  but  it  was  abandoned  by  the  parties 
by  mutual  consent.  Cone  then  went  on  and  rendered  services,  and 
sued  for  professional  services  in  prosecuting  and  defending  causes, 
also  for  examining  records  in  public  offices,  abstracting  title  to  lands, 
drawing,  copying  and  engrossing  conveyances,  deeds  and  writings,  for 
journeys  and  purchasing  lands,  and  for  work  and  labor.  Thus,  it  will 
be  seen,  that,  although  it  may  have  been  argued,  the  question  of  main- 
tenance or  champerty  was  not  before  the  court,  but  simply  whether  an 
attorney  may  recover  a  fair  compensation  for  professional  services 
and  labor  performed  as  an  agent,  and  it  was  held  that  a  contract  of 
hiring,  for  the  purpose  of  investigating  title,  and  making  purchases, 
and  rendering  legal  services  in  settling  titles  to  land  thus  purchased, 
was  legal,  and  the  person  employed  could  recover  for  such  services. 
It  is  true  that  the  court  refer  to  the  ancient  common  law  and  British 


AGREEMENTS   CONTRAEY  TO   PUBLIC   POUCT  257 

statutes  to  show  that  the  contract  of  the  parties  then  before  the  court 
was  not  affected  by  them.  It  was  also  shown  that  our  statute  against 
maintenance  did  not  embrace  that  contract.  There,  a  person  desiring 
to  purchase  lands  employed  an  attorney  to  examine  title,  to  give  him 
an  opinion  as  to  its  validity,  and  when  purchased  to  litigate  against 
conflicting  titles,  which  was  held  not  to  be  maintenance.  That  case  is 
essentially  different  from  this,  both  in  its  facts  and  on  principle,  and 
for  these  reasons  it  cannot  be  regarded  as  an  authority  in  favor  of 
appellee  in  this  case. 

This  court  has  held  in  Gilbert  v.  Holmes,  64  111.  548,  and  Walsh  v, 
Shumway,  65  111.  471,  that  similar  contracts  were  tainted  with  cham- 
perty, and  could  not  be  enforced. 

According  to  the  doctrine  of  the  case  of  Scobey  v.  Ross,  13  Ind. 
117,  there  can  be  no  question  that  this  contract  is  champertous,  ac- 
cording to  the  doctrine  of  the  courts  of  this  country.  That  case  refers 
to  and  reviews  a  large  number  of  American  decisions  on  this  question, 
and  carries  the  doctrine  to  the  full  extent  of  the  English  rule. 

It  was  the  policy  of  the  common  law  to  protect  persons  from  har- 
assing and  vexatious  litigation.  Hence,  it  would  not  permit  a  person 
having  no  interest  in  the  subject  matter  of  the  litigation  to  intermeddle 
or  to  become  interested  in  the  suit  of  another,  unless  it  was  an  attor- 
ney, who  could  only  have  and  demand  a  fee  for  his  services,  and  that 
not  in  a  portion  of  the  thing  in  dispute.  In  the  absence  of  such  a 
rule,  great  wrong  would  necessarily  be  inflicted  on  community. 

On  a  consideration  of  all  the  authorities,  we  are  clearly  of  opinion 
that  this  contract,  however  honestly  entered  into  and  carried  out,  was 
void,  and  that  the  judgment  of  the  court  below  should  be  reversed, 
and  the  cause  remanded.    Judgment  reversed. 


5.  Agreements  of  Immoral  Tendency 


EDMONDS  V.  HUGHES. 

(Court  of  Appeals  of  Kentucky,  1903.     115  Ky.  561,  74   S.   W.  283.) 

Action  by  Flora  Edmonds  against  A.  T.  Hughes.  From  a  judgment 
lor  defendant,  plaintiff  appeals. 

Barker,  J.''  The  appellee.  Flora  Edmonds,  instituted  this  action  in 
the  Todd  circuit  court  to  recover  damages  of  the  appellee  for  a  breach 
of  his  contract  to  marry  her.  The  facts  stated  in  the  petition  con- 
stitute a  valid  cause  of  action.     Appellee,  in  his  answer,  adm'ts  his 

T  A  portion  of  the  opinion  is  ouiiLLcd. 
TnBOCKM.CONT. — 17 


258  LEGALITY   OF  OBJECT 

promise  to  marry  appellant  as  alleged  in  the  petition,  but  pleads  as  a 
defense :  First.  That  the  consideration  for  the  contract  was  the  agree- 
ment by  appellant  to  then  and  there  have  illicit  intercourse  with  him, 
and  that  his  promise  was  made  upon  no  other  consideration.  *  *  ^^  * 
In  Beach  on  the  Modern  Law  of  Contracts,  §  1553,  it  is  said:  "A 
contract  made  in  consideration  of  future  illicit  sexual  intercourse  is 
void,  and  the  woman  cannot  recover  under  such  contract,  although  it 
has  'been  performed  on  her  part."  In  Parsons  on  Contracts,  star 
page  66,  the  rule  is  thus  stated:  "But  it, would  seem  on  general  prin- 
ciples to  be  a  good  defense  [to  an  action  for  breach  of  promise  to 
marry]  that  the  promise  was  made  on  condition  that  the  plaintiff 
would  commit  fornication  with  the  defendant;  for  such  a  promise 
might  be  void  as  founded  upon  an  illegal  consideration."  In  Baldy 
v.  Stratton,  11  Pa.  316,  the  court  say:  "A  promise  to  marry  on  condi- 
tion of  illicit  intercourse  is  illegal,  and  a  consideration  that  will  not 
support  a  promise.  A  promise  to  marry  on  an  illegal  consideration  is 
virtually  void."  In  the  case  of  Judy  v.  Sterrett,  52  111.  App.  265,  it 
was  held  that  "a  promise  of  marriage  in  consideration  of  illicit  sexual 
intercourse  is  void."  In  the  case  of  Hanks  v.  Naglee,  54  Cal.  52,  25 
Am.  Rep.  67,  it  is  said:  "Upon  well-settled  principles  the  plaintiff 
should  not  have  recovered  upon  a  contract  of  this  character  [to  mar- 
ry] ,  as,  being  a  contract  for  illicit  cohabitation,  it  is  tainted  with  im- 
morality. *  ♦  *  It  was  confessedly  not  a  case  in  which  the  de- 
fendant, taking  advantage  of  the  trust  and  confidence  which  may  be 
fairly  supposed  to  exist  between  parties  who  have  in  apparent  good 
faith  made  mutual  promises  of  marriage,  has  abused  the  confidence 
of  the  female,  and  induced  her  to  yield  him  favors  which  she  might 
have  otherwise  withheld.  The  agreement  to  yield  her  person  to  him 
was  one  appearing  to  have  been  deliberately  made  in  advance,  and 
when  there  had  been  no  promise  of  marriage."     *     ♦     * 

We  conclude,  then,  from  these  authorities,  that  each  of  the  three  de- 
fenses set  up  by  the  appellee  in  his  answer,  if  true,  constituted  a  valid 
bar  to  the  cause  of  action  contained  in  the  petition.  These  principles 
of  law  were  all  fairly  presented  to  the  jury  in  the  instructions,  which, 
after  a  careful  examination,  we  think  were  as  liberal  to  the  appellant's 
interest  as  she  was  entitled,  and  that  the  evidence  justified  the  verdict 
rendered  by  the  jury.    Wherefore  the  judgment  is  afifirmed. 


AQEEEMENTS   CONTKAEY   TO   PUBLIC   POLICY  259 


6.  Agreements  Tending  to  Fraud  and  Breach  oe  Trust 


LEVY  V.  SPENCER. 

(Supreme  Court  of  Colorado,  1893.     18  Colo.  532,  33  Pac.  415,  36  Am. 

St  Rep.  303.) 

Action  by  Benjamin  D.  Spencer  against  Archibald  T.  Levy  to  re- 
cover part  of  the  commissions  received  by  defendant  for  the  sale  of 
certain  real  estate.  From  a  judgment  for  plaintiff,  defendant  appeals. 
Reversed. 

The  other  facts  fully  appear  in  the  following  statement  by  God- 
dard,  J. : 

This  action  was  instituted  by  the  appellee  in  the  district  court  of 
Arapahoe  county  to  recover  from  the  appellant  a  part  of  a  commission 
received  by  him  on  account  of  a  certain  real-estate  transaction.  On 
the  14th  day  of  March,  1890,  the  plaintiff  filed  an  amended  complaint, 
which,  in  substance  is  as  follows:  "That  both  plaintiff  and  defendant 
herein  are  real-estate  agents,  residing  and  doing  business  in  the  city 
of  Denver,  and  the  state  of  Colorado,  and  were  so  residing  and  doing 
business  in  said  city  at  the  times  herein  mentioned.  That  on  the 
day  of ,  A.  D.  1889,  at  Denver,  Colorado,  the  said  de- 
fendant, as  a  real-estate  agent,  as  aforesaid,  had  in  his  hands  for  sale 
an  undivided  one-half  interest  in  lots  seven  to  sixteen,  (7-16,)  in- 
clusive, block  one  hundred  and  forty-one,  (141,)  East  Denver,  said 
property  being  located  at  the  corner  of  Seventeenth  and  Stout  streets, 
city  of  Denver,  and  better  known  as  the  'Albany  Hotel  Property;' 
said  undivided  interest  being  the  property  of  one  Charles  H.  Nix,  the 
said  one-half  interest  to  be  sold  by  said  defendant  for  two  hundred 
and  fifty  thousand  dollars,  ($250,000.)  That  as  commission  for  the 
sale  of  said  one-half  interest,  as  plaintiff  is  informed  and  believes,  and 
so  charges,  was  then  to  be  paid  to  said  defendant  the  sum  of  ten  thou- 
sand dollars,  ($10,000.)  That  at  the  same  time  and  place  this  plain- 
tiff did,  as  agent  as  aforesaid,  have  for  sale  a  certain  one-half  undi- 
vided interest  in  certain  real  estate  lying  and  being  in  the  county  of 
Jefferson,  and  state  of  Colorado,  *  *  *  for  sale  for  the  sum  of 
seventy-five  thousand  dollars,  ($75,000,)  and  in  the  event  of  making 
the  sale  of  said  property  this  plaintiff  was  to  receive  the  sum  of  three 
thousand  seven  hundred  and  fifty  dollars  ($3,750)  as  commission ; 
said  last  described  one-half  interest  being  the  property  of  one  A.  L. 
Jones.  That  said  Jones  and  said  Nix,  being  desirous  of  trading  or 
selling  their  aforesaid  interests,  the  said  plaintiff  and  defendant,  as 
agents  of  said  parties,  being  desirous  of  bringing  about  ?aid  sale  or 
taid  trade   for  said  property,  in  consideration  of  that    fact,  and   for 


260  LEGALITY  OF  OBJECT 

Other  mutual  benefits  and  considerations,  said  plaintiff  and  said  de- 
fendant did  on  the  day  of  ,  1889,  agree  by  and  with 

each  other  that  each  of  said  plaintiff  and  defendant  were  to  use  their 
best  endeavors  to  effect  a  trade  of  the  said  property  between  the  said 
Nix  and  the  said  Jones  at  the  prices  hereinbefore  stated,  and  that,  in 
the  event  of  their  eft'ecting  a  trade  or  sale  between  the  said  parties, 
that  in  consideration  of  that  fact  and  other  considerations  herein 
mentioned,  that  they  would  each  pay  to  the  other,  whenever  collected, 
one-half  of  the  commission  paid  to  said  agents,  by  their  respective 

principals.     That  on  the  day  of  ,  A.  D.  1889,  plaintiff 

and  defendant  did  effect  a  trade  or  sale  of  the  properties  herein  men- 
tioned between  their  respective  principals,  the  said  Jones  and  the  said 
Nix,  at  the  prices  hereinbefore  mentioned ;  the  said  Jones  executing 
to  the  said  Nix  a  trust  deed  upon  the  aforesaid  Albany  Hotel  property 
of  the  difference  between  the  price  of  his,  the  said  Jones',  property  and 
the  price  of  the  said  Nix's  Albany  Hotel  property.  That  defendant 
has,  as  plaintiff  is  informed  and  believes,  and  so  charges,  collected  and 
settled  with  the  said  Nix  for  the  commission  agreed  to  be  paid  to 
said  defendant  by  said  Nix,  to  wit,  the  sum  of  ten  thousand  dollars, 
($10,000.00.)  That  plaintiff,  before  the  institution  of  this  suit,  has 
demanded  of  said  defendant  one-half  of  the  said  commission  paid  by 
the  said  Nix  to  defendant,  and  to  which  this  plaintiff,  under  his  afore- 
said contract,  was  entitled,  to  wit,  the  sum  of  five  thousand  dollars, 
($5,000.00.)  That  the  defendant  has  failed  and  refused,  and  still 
fails  and  refuses,  to  pay  to  this  plaintiff  any  part  of  said  sum  of  five 
thousand  dollars,  ($5,000.00.)  Wherefore  plaintiff  demands  judgment 
against  the  said  defendant  for  the  sum  bf  five  thousand  dollars,  ($5,- 
000.00,)  for  interest,  and  the  cost  of  this  suit." 

Defendant  demurred  to  the  amended  complaint,  on  the  ground  that 
it  did  not  state  facts  sufficient  to  constitute  a  cause  of  action,  which 
demurrer  was  sustained,  and  thereafter,  on  May  9,  1890,  plaintiff  filed 
the  following  amendment :  "Plaintiff  alleges  that  he  is  ready  and  will- 
ing and  does  hereby  allow  to  defendant  Levy  credit  on  the  five  thou- 
sand dollars  claimed  by  this  plaintiff  from  said  defendant,  one-half 
of  three  thousand  seven  hundred  and  fifty  dollars,  to  wit,  the  sum  of 
eighteen  hundred  and  seventy-five  dollars  ($1,875.00,)  being  one-half 
the  amount  due  to  this  plaintiff  from  his  principal,  A.  L.  Jones.  Plain- 
tiff makes  this  as  an  amendment  to  and  as  part  of  the  amended  com- 
plaint herein.  Wherefore  the  plaintiff  prays  as  in  his  amended  com- 
plaint for  the  sum  of  five  thousand  dollars,  subject  to  a  credit  thereon 
of  the  sum  of  eighteen  hundred  and  seventy-five  dollars;  prays  for 
his  costs  herein,  and  for  all  other  proper  relief." 

A  motion  was  interposed  to  strike  out  this  amendment  for  the  fol- 
lowing reason,  among  others :  "First,  because  the  said  amendment 
does  not  state  any  fact  upon  which  a  cause  of  action  could  arise,  nor 
any  fact  which,  taken  in  connection  with  the  original  complaint,  to 
which  it  is  an  amendment,  (or  of  which  it  is  an  amendment,)  is  suffi- 


AGREEMENTS   CONTEAEY   TO   PDBLIO   POLICY  261 

dent  to  constitute  a  cause  of  action;"    and  also  a  motion  for  judg- 
ment on  the  pleadings.    These  motions  were  denied. 

Thereupon  the  defendant  answered  as  follows:  "And  now  comes 
the  defendant  in  the  above-entitled  action,  and  for  a  first  defense  to 
the  plaintiff's  amended  complaint  and  the  so-called  amendment  there- 
to he  denies  each  and  every  allegation  in  said  amended  complaint  and 
the  amendment  thereto  contained,  and  takes  issue  thereon.  And  for 
a  second  defense  to  said  amended  complaint  and  the  amendment  there- 
to the  defendant  says  that  it  appears  in  and  by  said  amended  complaint 
and  the  amendment  thereto  that  the  plaintiff  and  defendant  were 
agents  for  two  separate  principals,  under  contracts  to  sell  the  lands 
of  said  several  principals  for  cash;  and  that  the  said  agents  con- 
spired and  confederated  together  to  force,  persuade,  and  by  virtue  of 
said  conspiracy  and  confederation  did  force  and  persuade,  their  sev- 
eral principals  to  enter  into  an  exchange  of  their  lands,  contrary  to 
their  respective  contracts  with  their  respective  principals.  That  it 
further  appears  by  said  complaint  that  the  commission  sued  for  by 
the  plaintiff  in  this  cause,  and  the  amount  which  he  seeks  to  recover, 
is  part  and  portion  of  a  fund  which  accrued  to  said  agents  by  reason 
of  said  unlawful  conspiracy  and  combination  between  the  plaintiff  and 
defendant.  That  the  agreement  between  the  plaintiff  and  defendant, 
as  set  forth  in  said  complaint  and  the  amendment  thereto,  is  contrary 
to  public  policy  and  to  law,  and  that  the  plaintiff  herein,  being  a  party 
thereto;  cannot  in  law  recover  any  part  or  portion  thereof  from  the 
defendant." 

Upon  motion  of  plaintiff  the  second  defense  was  stricken  out.  The 
case  coming  on  for  trial,  defendant  objected  to  the  admission  of  any 
evidence,  because  the  complaint  did  not  state  facts  sufficient  to  con- 
stitute a  cause  of  action,  which  objection  was  overruled;  and  upon 
the  evidence  adduced  the  court  found  for  the  plaintiff,  and  assessed 
his  damages  at  the  sum  of  $1,625,  and  rendered  judgment  accordingly. 
To  reverse  this  judgment  the  defendant  prosecutes  this  appeal. 

GoDDARD,  J.,  (after  stating  the  facts.)  This  record  presents  but  one 
question  that  we  can  properly  consider,  and  one  that  was  fully  and 
fairly  presented  in  the  court  below  by  the  demurrer,  the  answer,  and 
the  objection  to  the  admission  of  any  testimony  under  the  complaint, 
and  that  is  whether  the  complaint  states  a  cause  of  action.  This  is  to 
be  determined  by  the  validity  or  invalidity  of  the  agreement,  as  there- 
in stated,  upon  which  appellee  predicates  his  right  to  recover.  In  our 
judgment,  this  agreement  comes  clearly  within  that  class  of  contracts 
that  is  inhibited  by  public  policy,  and  consequently  void.  By  its  terms 
each  agent  was  to  share  in  the  commissions  paid  by  both  principals. 
The  compensation  to  be  jointly  shared  was  contingent  upon  the  con- 
summation of  the  trade  or  sale,  and  this  would  have  a  tendency  to 
induce  them  to  disregard,  if  not  to  sacrifice,  the  interests  of  their  prin- 
cipals, if  necessary  to  effect  that  result.  The  fact  that  a  sale  price  was 
fixed  by  the  principals  upon  their  respective  properties  does  not  an- 


262 


LEGALITY   OF  OBJECT 


svver  this  objection.  Each  was  entitled  to  the  benefit  of  the  unbiased 
judgment  of  his  agent  as  to  the  value  to  be  placed  upon  the  other's 
property,  and  to  a  reasonable  effort  on  the  part  of  such  agent  to  ob- 
tain a  reduction  of  the  value  to  be  allowed  therefor  in  the  exchange. 
Their  pecuniary  interest  might  have  prevented  such  disinterested  ac- 
tion on  the  part  of  these  agents ;  and,  it  appearing  from  the  allega- 
tions of  the  complaint  that  they  "did  effect  the  trade  or  sale  of  the 
property  as  between  their  respective  principals,"  the  transaction  is  as 
objectionable  as  those  universally  conderpned,  wherein  one  agent  acts 
for  both  principals  without  their  knowledge  or  consent. 

This  objection  is  not  answered  by  the  claim  that  the  evidence  as 
introduced  shows  a  transaction  different  from  that  pleaded,  that  their 
principals  negotiated  the  trade  between  themselves,  and  that  in  fact 
plaintiff  and  defendant  acted  only  as  middlemen  in  bringing  Nix  and 
Jones  together.  Such  evidence  was  not  inadmissible  merely  because 
variant  from  the  allegations  of  the  complaint,  but  because  of  the  fun- 
damental vice  in  the  complaint  itself  in  not  stating  a  cause  of  action 
susceptible  of  proof,  or  one  that  would  justify  the  admission  of  any 
testimony  or  uphold  any  judgment.  The  contention  of  appellee's  coun- 
sel that,  the  transaction  being  completed,  and  money  paid,  the  appel- 
lant cannot  avail  himself  of  the  illegality  of  the  contract  to  retain  it, 
cannot  be  sustained.  The  cases  relied  on  as  upholding  the  doctrine 
that,  when  profits  are  realized  through  an  illegal  transaction,  and  re- 
ceived by  one  of  the  joint  owners,  they  cannot  be  retained  by  him  by 
reason  of  the  illegality  of  the  transactions  through  which  they  are  de- 
rived, are  clearly  distinguishable  from  the  case  at  bar.  In  this  case 
appellee  asserts  a  claim  against  appellant  founded  upon,  and  recover- 
able only  through  and  by  virtue  of,  an  illegal  agreement.  It  is  there- 
fore an  action  to  enforce  an  illegal  executory  contract.  The  well- 
established  rule  in  such  case  is  as  expressed  in  Railway  Co.  v.  Buck, 
116  Ind.  566,  19  N.  E.  453,  2  L.  R.  A.  520,  9  Am.  St.  Rep.  883.  "It 
is  quite  true  that  a  plaintiff  will  in  no  case  be  permitted  to  recover 
when  it  is  necessary  for  him  to  prove  his  own  illegal  act  or  contract 
as  a  part  of  his  cause  of  action,  or  when  an  essential  element  of  his 
cause  of  action  is  his  own  violation  of  law." 

Our  conclusion  on  this  question  renders  a  notice  of  the  other  er- 
rors assigned  unnecessary.  The  judgment,  therefore,  will  be  reversed 
for  the  reasons  above  given. 


ageeements  contkaby  to  pdbuo  policy  263 

7.  Agreements  in  Derogation  of  the  Marriage  Rei^ation 


MORRISON  V.  ROGERS. 

(Supreme  Court  of  California  1S96.     115  Gal.  252,  46  Pac.  1072,  5G 
Am.  St  Rep.  95.) 

Action  by  Morrison  against  Rogers.    Judgment  for  defendant,  and 
plaintiff  appeals. 

Harrison,  J.  This  action  was  brought  to  recover  certain  moneys, 
which  it  is  alleged  the  defendant  promised  to  pay  to  the  plaintiff  if 
she  would  use  her  influence  in  endeavoring  to  induce  a  certain  person 
to  marry  the  defendant,  and  should  be  instrumental  in  bringing  about 
such  marriage.  It  is  alleged  that,  in  consideration  of  said  promise 
by  the  defendant,  the  plaintiff  did  endeavor  to  persuade  said  person 
to  marry  the  defendant,  and  was  instrumental  in  bringing  said  mar- 
riage about,  and  that  the  defendant  has  failed  to  keep  her  promise  and 
has  not  paid  the  money  agreed  by  her  to  be  paid.  The  rule  that  a 
marriage  brokerage  contract  is  invalid,  as  being  contrary  to  public 
policy,  and  that  the  services  rendered  under  such  contract  are  without 
legal  consideration,  and  are  incapable  of  forming  the  foundation  of 
an  action  for  their  recovery,  is  so  elementary  that  but  very  few  cases 
involving  the  question  have  found  their  way  into  the  reported  deci- 
sions; but,  whenever  the  question  has  been  presented,  courts  have 
invariably  declared  that  the  action  could  not  be  maintained.  Story, 
Eq.  Jur.  §  261 ;  2  Pars.  Cont.  *74 ;  Greenh.  Pub.  Pol.  478 ;  William- 
son V.  Gihon,  2  Schoales  &  L.  357;  Crawford  v.  Russell,  62  Barb. 
(N.  Y.)  92;  Duval  v.  Wellman,  124  N.  Y.  159,  26  N.  E.  343;  John- 
son V.  Hunt,  81  Ky.  321. 

It  is  sought  to  distinguish  the  present  case  from  those  in  which  the 
rule  has  been  laid  down  by  the  fact  that  here  there  was  an  existing 
agreement  for  marriage  between  the  parties,  and  that  the  agreement 
with  the  defendant  was  only  for  the  purpose  of  promoting  the  carry- 
ing out  of  that  agreement.  We  are  of  the  opinion,  however,  that  this 
fact  does  not  take  the  case  out  of  the  above  rule.  The  same  reasons 
by  which  the  rule  is  upheld  control  here.  The  freedom  of  choice 
essential  to  a  happy  marriage,  and  the  voluntary  selection  by  each 
spouse  of  the  person  who  is  to  be  his  or  her  companion  for  life,  with 
all  that  is  implied  in  the  relation. of  marriage,  are  as  fully  prevented 
by  the  employment  of  a  person  who  is  governed  solely  by  mercenary 
motives  to  induce  one  of  the  parties  to  an  agreement  for  marriage  to 
carry  it  into  effect,  if  he  or  she  has  once  been  disposed  to  abandon  it, 
as  by  an  endeavor  to  bring  about  such  an  agreement  between  parlies 
who  do  not  sustain  any  relation  to  each  other.  The  basis  of  the 
agreement  with  the  plaintiff  in  the  present  case  is  alltged  to  be  the 


264  LEGALITY  OF  OBJECT 

fact  that  the  defendant  became  apprehensive  that  the  person  who  had 
agreed  to  marry  her  would  not  keep  his  agreement,  and  it  was  for 
the  purpose  of  inducing  him  to  forego  whatever  purpose  he  had  to 
abandon  such  contemplated  marriage  that  the  plaintiff  rendered  the 
services  for  which  the  action  is  brought.  There  can  be  no  difference, 
in  principle,  between  services  rendered  under  such  an  employment 
and  those  rendered  for  the  purpose  of  inducing  one  to  marry  another 
v^diom  he  did  not  previously  know. 

The  court  properly  sustained  the  demurrer  to  the  complaint,  and 
the  judgment  is  affirmed. 


8.  Agreements  in  Restraint  oif  Tradb 
(A)  In  General 


DIAMOND  MATCH  CO.  v.  ROEBER. 

(Court  of  Appeals  of  New  York.  1SS7.     106  N.  T.  473,  13  N.  E.  419, 
60  Am.  Rep.  464.) 

This  action  was  brought  by  the  Diamond  Match  Company  to  re- 
strain the  defendant,  William  Roeber,  from  engaging  in  the  manufac- 
ture or  sale  of  friction  matches  in  violation  of  a  covenant  in  a  bill  of 
sale  executed  by  the  defendant. 

Andrews,  J.®  Two  questions  are  presented — First,  whether  the 
covenant  of  the  defendant  contained  in  the  bill  of  sale  executed  by 
him  to  the  Swift  &  Courtney  &  Beecher  Company  on  the  twenty- 
seventh  day  of  August,  1880,  that  he  shall  and  will  not  at  any  time 
or  times  within  99  years,  directly  or  indirectly  engage  in  the  manufac- 
ture or  sale  of  friction  matches  (excepting  in  the  capacity  of  agent  or 
employe  of  the  said  Swift  &  Courtney  &  Beecher  Company)  within 
any  of  the  several  states  of  the  United  States  of  America,  or  in  the 
territories  thereof,  or  within  the  District  of  Columbia,  excepting  and 
reserving,  however,  the  right  to  manufacture  and  sell  friction  matches 
in  the  stafe  of  Nevada,  and  in  the  territory  of  Montana,  is  void  as 
being  a  covenant  in  restraint  of  trade ;  and,  second,  as  to  the  right 
of  the  plaintiff,  under  the  special  circumstances,  to  the  equitable  rem- 
edy by  injunction  to  enforce  the  peVformance  of  the  covenant. 

There  is  no  real  controversy  as  to  the  essential  facts.  The  consid- 
eration of  the  covenant  was  the  purchase  by  the  Swift  &  Courtney  & 
Beecher  Company,  a  Connecticut  corporation,  of  the  manufactory  No. 
528  West  Fiftieth  street,  in  the  city  of  New  York,  belonging  to  the 

•  A  portion  of  the  opiuion  is  omitted. 


AGREEMENTS   CONTRARY   TO   PUBLIC   POLICY  265 

defendant,  in  which  he  had,  for  several  years  prior  to  entering  into  the 
covenant,  carried  on  the  business  of  manufacturing  friction  matches, 
and  of  the  stock  and  materials  on  hand,  together  with  the  trade,  trade- 
marks, and  good-will  of  the  business,  for  the  aggregate  sum  (exclud- 
ing a  mortgage  of  $5,000  on  the  property  assumed  by  the  company) 
of  $46,724.05,  of  which  $13,000  was  the  price  of  the  real  estate.  By 
the  preliminary  agreement  of  July  27,  1880,  $28,000  of  the  purchase 
price  was  to  be  paid  in  the  stock  of  the  Swift  &  Courtney  &  Beecher 
Company.  This  was  modified  when  the  property  was  transferred, 
August  27,  1880,  by  giving  to  the  defendant  the  option  to  receive  the 
$28,000  in  the  notes  of  the  company  or  in  its  stock,  the  option  to  be 
exercised  on  or  before  January  1,  1881.  The  remainder  of  the  pur- 
chase price,  $18,724.05,  was  paid  down  in  cash,  and  subsequently, 
March  1,  1881,  the  defendant  accepted  from  the  plaintiff,  the  Diamond 
Match  Company,  in  full  payment  of  the  $28,000,  the  sum  of  $8,000  in 
cash  and  notes,  and  $20,000.  in  the  stock  of  the  plaintiff ;  the  plaintiff 
company  having  prior  to  said  payment  purchased  the  property  of  the 
Swift  &  Courtney  &  Beecher  Company,  and  become  the  assignee  of 
the  defendant's  covenant. 

It  is  admitted  by  the  pleadings  that  in  August,  1880,  (when  the 
covenant  in  question  was  made,)  the  Swift  &  Courtney  &  Beecher 
Company  carried  on  the  business  of  manufacturing  friction  matches 
in  the  states  of  Connecticut,  Delaware,  and  Illinois,  and  of  selling  the 
matches  which  it  manufactured  "in  the  several  states  and  territories 
of  the  United  States,  and  in  the  District  of  Columbia;"  and  the  com- 
plaint alleges  and  the  defendant  in  his  answer  admits  that  he  was  at 
the  same  time  also  engaged  in  the  manufacture  of  friction  matches  in 
the  city  of  New  York,  and  in  selling  them  in  the  same  territory.  The 
proof  tends  to  support  the  admission  in  the  pleadings.  It  was  shown 
that  the  defendant  employed  traveling  salesmen,  and  that  his  matches 
were  found  in  the  hands  of  dealers  in  10  states.  The  Swift  &  Court- 
ney &  Beecher  Company  also  sent  their  matches  throughout  the  coun- 
try wherever  they  could  find  a  market.  When  the  bargain  was  con- 
summated, on  the  twenty-seventh  of  August,  1880,  the  defendant  en- 
tered into  the  employment  of  the  Swift  &  Courtney  &  Beecher  Com- 
pany, and  remained  in  its  employment  until  January,  1881,  at  a  salary 
of  $1,500  a  year.  He  then  entered  into  the  employment  of  the  plain- 
tiff, and  remained  with  it  during  the  year  1881,  at  a  salary  of  $2,500 
a  year,  and  from  January  1,  1882,  at  a  salary  of  $3,600  a  year,  when, 
a  disagreement  arising  as  to  the  salary  he  should  thereafter  receive, 
the  plaintiff  declining  to  pay  a  salary  of  more  than  $2,500  a  year,  the 
defendant  voluntarily  left  its  service.  Subsequently  he  became  su- 
perintendent of  a  rival  match  manufacturing  company  in  New  Jersey, 
at  a  salary  of  $5,000,  and  he  also  opened  a  store  in  New  York  for 
the  sale  of  matches  other  than  those  manufactured  by  the  plaintiff. 

The  contention  by  the  defendant  that  the  plaintiff  has  ho  equitable 
remedy  to  enforce  the  covenant,  rests  mainly  on  the  fact  that  contcm- 


266  LEGALITY  OP  OBJECT 

poraneously  with  the  execution  of  the  covenant  of  August  27,  1880, 
the  defendant  also  executed  to  the  Swift  &' Courtney  &  Beecher  Com- 
pany a  bond  in  the  penalty  of  $15,000,  conditioned  to  pay  that  sum 
to  the  company  as  liquidated  damages  in  case  of  a  breach  of  his  cove- 
nant. 

The  defendant  for  his  main  defense  relies  upon  the  ancient  doctrine 
of  the  common  law,  first  definitely  declared,  so  far  as  I  can  discover, 
by  Chief  Justice  Parker  (Lord  Macclesfield)  in  the  leading  case  of 
Mitchel  V.  Reynolds,  1  P.  Wms.  181,,  and  which  has  been  repeated 
many  times  by  judges  in  England  and  America,  that  a  bond  in  gener- 
al restraint  of  trade  is  void.  There  are  several  decisions  in  the  Eng- 
lish courts  of  an  earlier  date,  in  which  the  question  of  the  validity  of 
contracts  restraining  the  obligor  from  pursuing  his  occupation  within 
a  particular  locality  was  considered.  The  cases  are  chronologically  ar- 
ranged and  stated  by  Mr.  Parsons  in  his  work  on  Contracts  (volume 
2,  p.  748,  note.)  The  earliest  reported  case,  decided  in  the  time  of 
Henry  V.,  was  a  suit  on  a  bond  given  by  the  defendant,  a  dyer,  not 
to  use  his  craft  within  a  certain  city  for  the  space  of  half  a  year. 
The  judge  before  whom  the  case  came  indignantly  denounced  the 
plaintiff  for  procuring  such  a  contract,  and  turned  him  out  of  court. 
This  was  followed  by  cases  arising  on  contracts  of  a  similar  charac- 
ter, restraining  the  obligors  from  pursuing  their  trade  within  a  certain 
place  for  a  certain  time,  which  apparently  presented  the  same  question 
which  had  been  decided  in  the  dyer's  case,  but  the  courts  sustained  the 
contracts,  and  gave  judgment  for  the  plaintiffs ;  and  before  the  case  of 
Mitchel  v.  Reynolds  it  had  become  settled  that  an  obligation  of  this 
character,  limited  as  to  time  and  space,  if  reasonable  under  the  circum- 
stance, and  supported  by  a  good  consideration,  was  valid.  The  case  in 
the  Year  Books  went  against  all  contracts  in  restraint  of  trade,  wheth- 
er limited  or  general.  The  other  cases  prior  to  Mitchel  v.  Reynolds 
sustained  contracts  for  a  particular  restraint,  upon  special  grounds, 
and  by  inference  decided  against  the  validity  of  general  restraints. 
The  case  of  Mitchel  v.  Reynolds  was  a  case  of  partial  restraint,  and 
the  contract  was  sustained. 

It  is  worthy  of  notice  that  most,  if  not  all,  the  English  cases  which 
assert  the  doctrine  that  all  contracts  in  general  restraint  of  trade  are 
void,  were  cases  where  the  contract  before  the  court  was  limited  or 
partial.  The  same  is  generally  true  of  the  American  cases.  The 
principal  cases  in  this  state  are  of  that  character,  and  in  all  of  them 
the  particular  contract  before  the  court  was  sustained.  Nobles  v. 
Bates,  7  Cow.  307;  Chappel  v.  Brockway,  21  Wend.  157;  Dunlop 
V.  Gregory,  10  N.  Y.  241,  61  Am.  Dec.  746.  In  Alger  v.  Thacher,  19 
Pick.  (Mass.)  51,  31  Am.  Dec.  119,  the  case  was  one  of  general  re- 
straint, and  the  court,  construing  the  rule  as  inflexible  that  all  con- 
tracts in  general  restraint  of  trade  are  void,  gave  judgment  for  the 
defendant.  In  Mitchel  v.  Reynolds  the  court,  in  assigning  the  reason 
for  the  distinction  between  a  contract  for  the  general  restraint  of  trade 


AQEEEMENTS   CONTRAEY  TO   PUBLIC   POLICY  267 

and  one  limited  to  a  particular  place,  says:  "for  the  former  of  these 
must  be  void,  being  of  no  benefit  to  either  party,  and  only  oppress- 
ive;" and  later  on,  "because  in  a  great  many  instances  they  can  be 
of  no  use  to  the  obligee,  which  holds  in  all  cases  of  general  restraint 
throughout  England ;  for  what  does  it  signify  to  a  tradesman  in  Lon- 
don what  another  does  in  Newcastle,  and  surely  it  would  be  unrea- 
sonable to  fix  a  certain  loss  on  one  side  without  any  benefit  to  the 
other."  He  refers  to  other  reasons,  viz.,  the  mischief  which  may  arise 
(1)  to  the  party  by  the  loss  by  the  obligor  of  his  livelihood  and  the 
substance  of  his  family,  and  (2)  to  the  public  by  depriving  it  of  a 
useful  member,  and  by  enabling  corporations  to  gain  control  of  the 
trade  of  the  kingdom. 

It  is  quite  obvious  that  some  of  these  reasons  are  much  less  forcible 
now  than  when  Mitchel  v.  Reynolds  was  decided.  Steam  and  electric- 
ity have  for  the  purposes  of  trade  and  commerce  almost  annihilated 
distance,  a'nd  the  whole  world  is  now  a  mart  for  the  distribution  of  the 
products  of  industry.  The  great  diffusion  of  wealth,  and  the  restless 
activity  of  mankind  striving  to  better  their  condition,  have  greatly  en- 
larged the  field  of  human  enterprise,  and  created  a  vast  number  of  new 
industries,  which  gives  scope  to  ingenuity  and  employment  for  capital 
and  labor.  The  laws  no  longer  favor  the  granting  of  exclusive  privi- 
leges, and  to  a  great  extent  business  corporations  are  practically  part- 
nerships, and  may  be  organized  by  any  persons  who  desire  to  unite  their 
capital  or  skill  in  business,  leaving  a  free  field  to  all  others  who  desire 
for  the  same  or  similar  purposes  to  clothe  themselves  with  a  corporate 
character.  The  tendency  of  recent  adjudications  is  marked  in  the  direc- 
tion of  relaxing  the  rigor  of  the  doctrine  that  all  contracts  in  general 
restraint  of  trade  are  void,  irrespective  of  special  circumstances.  In- 
deed, it  has  of  late  been  denied  that  a  hard  and  fast  rule  of  that  kind 
has  ever  been  the  law  of  England.  Rousillon  v.  Rousillon,  14  Ch.  Div. 
351.  The  law  has  for  centuries  permitted  contracts  in  partial  restraint 
of  trade,  when  reasonable ;  and  in  Horner  v.  Graves,  7  Bing.  735,  Chief 
Justice  Tindal  considered  a  true  test  to  be  "whether  the  restraint  is 
such  only  as  to  afford  a  fair  protection  to  the  interests  of  the  party 
in  favor  of  whom  it  is  given,  and  not  so  large  as  to  interfere  with 
the  interests  of  the  public." 

When  the  restraint  is  general,  but  at  the  same  time  is  co-extensive 
only  with  the  interest  to  be  protected,  and  with  the  benefit  meant  to 
be  conferred,  there  seems  to  be  no  good  reason  why,  as  between  the 
parties,  the  contract  is  not  as  reasonable  as  when  the  interest  is  par- 
tial, and  there  is  a  corresponding  partial  restraint.  And  is  there  any 
real  public  interest  which  necessarily  condemns  the  one,  and  not  the 
other?  It  is  an  encouragement  to  industry  and  to  enterprise  in  build- 
ing up  a  trade,  that  a  man  shall  be  allowed  to  sell  the  good-will  of  the 
business  and  the  fruits  of  his  industry  upon  the  best  terms  he  can 
obtain.  If  his  business  extends  over  a  continent,  does  public  policy 
forbid  his  accompanying  the  sale  with  a  stipulation  for  restraint  co- 


268  LEGALITY  OF  OBJECT  ' 

extensive  with  the  business  which  he  sells?  If  such  a  contract  is  per- 
mitted, is  the  seller  any  more  likely  to  become  a  burden  on  the  public 
than  a  man  who,  having  built  up  a  local  trade  only  sells  it,  binding 
himself  not  to  carry  it  on  in  the  locality?  Are  the  opportunities  for 
employment  and  for  the  exercise  of  useful  talents  so  shut  up  and 
hemmed  in  that  the  public  is  likely  to  lose  a  useful  member  of  society 
in  the  one  case,  and  not  in  the  other?  Indeed,  what  public  policy  re- 
quires is  often  a  vague  and  difficult  inquiry.  It  is  clear  that  public  pol- 
icy and  the  interests  of  society  favor  the  utmost  freedom  of  contract, 
within  the  law,  and  require  that  business  transactions  should  not  be 
trammeled  by  unnecessary  restrictions.  "If,"  said  Sir  George  Jessell  in 
Printing  Co,  v.  Sampson,  L.  R.  19  Eq.  462,  "there  is  one  thing  more 
than  any  other  which  public  policy  requires,  it  is  that  men  of  full  age 
and  competent  understanding  shall  have  the  utmost  liberty  of  con- 
tracting, and  that  contracts,  when  entered  into  freely  and  voluntarily, 
shall  be  held  good,  and  shall  be  enforced  by  courts  of  justice." 

It  has  sometimes  been  suggested  that  the  doctrine  that  contracts  in 
general  restraint  of  trade  are  void,  is  founded  in  part  upon  the  policy 
of  preventing  monopolies,  which  are  opposed  to  the  liberty  of  the 
subject,  and  the  granting  of  which  by  the  king  under  claim  of  royal 
prerogative  led  to  conflicts  memorable  in  English  history.  But  cove- 
nants of  the  character  of  the  one  now  in  question  operate  simply  to 
prevent  the  covenantor  from  engaging  in  the  business  which  he  sells, 
so  as  to  protect  the  purchaser  in  the  enjoyment  of  what  he  has  pur- 
chased. To  the  extent  that  the  contract  prevents  the  vendor  from 
carrying  on  the  particular  trade,  it  deprives  the  community  of  any  ben- 
efit it  might  derive  from  his  entering  into  competition.  But  the  busi- 
ness is  open  to  all  others,  and  there  is  little  danger  that  the  public 
will  suffer  harm  from  lack  of  persons  to  engage  in  a  profitable  indus- 
try. Such  contracts  do  not  create  monopolies.  They  confer  no  special 
or  exclusive  privilege.  If  contracts  in  general  restraint  of  trade,  where 
the  trade  is  general,  are  void  as  tending  to  monopolies,  contracts  in 
partial  restraint,  where  the  trade  is  local,  are  subject  to  the  same  ob- 
jection, because  they  deprive  the  local  community  of  the  services  of 
the  covenantor  in  the  particular  trade  or  calling,  and  prevent  his  be- 
coming a  competitor  with  the  covenantee.  We  are  not  aware  of  any 
rule  of  law  which  makes  the  motive  of  the  covenantee  the  test  of  the 
validity  of  such  a  contract.  On  the  contrary,  we  suppose  a  party  may 
legally  purchase  the  trade  and  business  of  another  for  the  very  pur- 
pose of  preventing  competition,  and  the  validity  of  the  contract,  if 
supported  by  a  consideration,  will  depend  upon  its  reasonableness  as 
between  the  parties.  Combinations  between  producers  to  limit  produc- 
tion, and  to  enhance  prices,  are  or  may  be  unlawful,  but  they  stand  on 
a  different  footing. 

We  cite  some  of  the  cases  showing  the  tendency  of  recent  judicial 
opinion  on  the  general  subject:  Whittaker  v.  Howe,  3  Beav.  383; 
Jones  V.  I,ees,   1   Hurl.  &  N.    189;    Rousillon  v.   Rousillon,   supra; 


AQEEEMENTS   CONTRARY   TO   PUBLIC   POLICY  26(9 

Leather  Co.  v.  Lorsont,  L.  R.  9  Eq.  345 ;  Collins  v.  Locke,  4  App. 
Cas.  674;  Steam  Co.  v.  Winsor,  20  Wall.  64,  22  L.  Ed.  315;  Morse, 
etc.,  Co.  V.  Morse,  103  Mass.  73,  4  Am.  Rep.  513.  In  Whittaker  v. 
Howe,  a  contract  made  by  a  solicitor  not  to  practice  as  a  solicitor  "in 
any  part  of  Great  Britain,"  was  held  valid.  In  Rousillon  v.  Rousillon 
a  general  contract  not  to  engage  in  the  sale  of  champagne,  without 
limit  as  to  space,  was  enforced  as  being  under  the  circumstances  a  rea- 
sonable contract.  In  Jones  v.  Lees,  a  covenant  by  the  defendant,  a 
licensee  under  a  patent,  that  he  would  not  during  the  license  make  or 
sell  any  slubbing  machines  without  the  invention  of  the  plaintiff  ap- 
plied to  them,  was  held  valid.  Bramwell,  J.,  said:  "It  is  objected 
that  the  restraint  extends  to  all  England,  but  so  does  the  privilege." 
In  Steam  Co.  v.  Winsor  the  court  enforced  a  covenant  by  the  defend- 
ant made  on  the  purchase  of  a  steam-ship,  that  it  should  not  be  run 
or  employed  in  the  freight  or  passenger  business  upon  any  waters  in 
the  state  of  California  for  the  period  of  10  years. 

In  the  present  state  of  the  authorities,  we  think  it  cannot  be  said 
that  the  early  doctrine  that  contracts  in  general  restraint  of  trade  are 
void,  without  regard  to  circumstances,  has  been  abrogated.  But  it  is 
manifest  that  it  has  been  much  weakened,  and  that  the  foundation 
upon  which  it  was  originally  placed  has,  to  a  considerable  extent  at 
least,  by  the  change  of  circumstances,  been  removed.  The  covenant  in 
the  present  case  is  partial,  and  not  general.  It  is  practically  unlimited 
as  to  time,  but  this  under  the  authorities  is  not  an  objection,  if  the 
contract  is  otherwise  good.  Ward  v.  Byrne,  5  Mees.  &  W.  548 ;  Mum- 
ford  V.  Gething,  7  C.  B.  (N.  S.)  317.  It  is  limited  as  to  space  sine 
it  excepts  the  state  of  Nevada  and  the  territory  of  Montana  from  its 
operation,  and  therefore  is  a  partial,  and  not  a  general,  restraint,  un- 
less, as  claimed  by  the  defendant,  the  fact  that  the  covenant  applies 
to  the  whole  of  the  state  of  New  York  constitutes  a  general  restraint 
within  the  authorities.  In  Chappel  v.  Brockway,  supra,  Bronson,  J., 
in  stating  the  general  doctrine  as  to  contracts  in  restraint  of  trade,  re- 
marked that  "contracts  which  go  to  the  total  restraint  of  trade,  as  that 
a  man  will  not  pursue  his  occupation  anywhere  in  the  state,  are  void." 
The  contract  under  consideration  in  that  case  was  one  by  which  the 
defendant  agreed  not  to  run  or  be  interested  in  a  line  of  packet-boats 
on  the  canal  between  Rochester  and  Buffalo.  The  attention  of  the 
court  was  not  called  to  the  point  whether  a  contract  was  partial,  which 
related  to  a  business  extending  over  the  whole  country,  and  which  re- 
strained the  carrying  on  of  business  in  the  state  of  New  York,  but 
excepted  other  states  from  its  operation.  The  remark  relied  upon 
was  obiter,  and  in  reason  cannot  be  considered  a  decision  upon  the 
point  suggested. 

We  are  of  the  opinion  that  the  contention  of  tiic  defendant  is  not 
sound  in  principle,  and  should  not  be  sustained.  The  boundaries  of 
the  states  are  not  those  of  trade  and  commerce,  and  business  is  re- 
strained within  no   such  limit.     The  country   as  a  wliolc  is  that  of 


270  LEGALITY  OF  OBJECT 

which  we  are  citizens,  and  our  duty  and  allegiance  are  due  both  to 
the  state  and  nation.  Nor  is  it  true  as  a  general  rule  that  a  business 
established  here  cannot  extend  beyond  the  state,  or  that  it  may  not  be 
successfully  established  outside  of  the  state.  There  are  trades  and 
employments  which  from  their  nature  are  localized,  but  this  is  not 
true  of  manufacturing  industries  in  general.  We  are  unwilling  to 
say  that  the  doctrine  as  to  what  is  a  general  restraint  of  trade  depends 
upon  state  lines,  and  we  cannot  say  that  the  exception  of  Nevada  and 
Montana  was  colorable  merely.  The  rule  itself  is  arbitrary,  and  we 
are  not  disposed  to  put  such  construction  upon  this  contract  as  will 
make  it  a  contract  in  general  restraint  of  trade,  when  upon  its  face  it 
is  only  partial.  The  case  of  Steam  Co.  v.  Winsor,  supra,  supports  the 
view  that  a  restraint  is  not  necessarily  general  which  embraces  an 
entire  state.  In  this  case  the  defendant  entered  into  the  covenant  as 
a  consideration  in  part  of  the  purchase  of  his  property  by  the  Swift 
&  Courtney  &  Beecher  Company,  presumably  because  he  considered 
it  for  his  advantage  to  make  the  sale.  He  realized  a  large  sum  in 
money,  and  on  the  completion  of  the  transaction  became  interested  as 
a  stockholder  in  the  very  business  which  he  had  sold.  We  are  of 
opinion  that  the  covenant,  being  supported  by  a  good  consideration, 
and  constituting  a  partial  and  not  a  general  restraint,  and  being,  in 
view  of  the  circumstances  disclosed,  reasonable,  is  valid  and  not 
void.     ♦    *     * 


(B)  Sale  of  Secret  Process 


TODE  et  al.  V.  GROSS. 

(Court  of  Appeals  of  New  York,  1891.     127  N.  Y.  480,  28  N.  E.  4G9,  13 
L.  R.  A,  652,  24  Am.  St.  Rep.  475.) 

Appeal  by  defendant  from  a  judgment  of  the  general  term  of  the 
supreme  court  in  the  second  judicial  department,  affirming  a  judg- 
ment entered  upon  the  decision  of  the  court  after  a  trial  without  a 
jury.    Affirmed. 

Action  for  breach  of  covenant  to  recover  the  sum  of  $5,000  as 
stipulated  damages.  On  the  15th  of  October,  1884,  the  defendant 
owned  a  cheese  factory  situate  in  the  town  of  Monroe,  Orange  coun- 
ty, comprising  two  parcels  of  land,  with  the  buildings  thereon,  and 
a  quantity  of  fixtures,  machinery,  and  tools  connected  therewith.  For 
some  time  prior,  with  the  assistance  of  her  husband,  Conrad  Gross, 
her  brother-in-law,  August  Gross,  and  her  father,  John  Hoffman,  she 
had  been  engaged  in  the  business  of  manufacturing  cheeses  at  said 
factory    known   as    "Fromage    de    Brie,"    "Fromage    d'Isigny,"    and 


AGREEMENTS   CONTRARY   TO   PUBLIC  POLICY  271 

"Neufchatel."     Such  cheeses  were  made  by  a  secret  process  known 
only  to  herself  and  her  said  agents.     On  the  day  last  named,  she  en- 
tered into  a  sealed  agreement  with  the  plaintiffs,  whereby  she  agreed 
to  sell  and  transfer  to  them  the  said  factory  and  all  its  belongings, 
together  with  the  "good-will,  custom,  trade-marks,  and  names  used  in 
and  belonging  to  the  said  business,"   for  the  sum  of  $25,000,  to  be 
paid  and  secured  March  1,  1885,  when  possession  was  to  be  given. 
Said   instrument  contained  a  covenant  on  her  part  that  she  would 
"communicate  after   the  first  day  of   March,    1885,  or  cause  to  be 
communicated,  to"  said  plaintiffs,  "by  Conrad  Gross,  John  Hoffman, 
and  August  Gross,  or  one  or  other  of  them,  the  secret  of  the  manu- 
facture of  the  cheeses  known  as  'Fromage   de  Brie,'   'Neufchatel,' 
and  'D'Isigny,'  and  the  recipe  therefor,  and  for  each  of  them,  and 
will  instruct  or  cause  to  be  instructed  them,  and  each  of  them  in 
the  manufacture  thereof.     And  that  she  and  the  said  Conrad  Gross, 
John   Hoffman,   and  August   Gross   will   refrain   from   communicat- 
ing the  secret  recipe  and  instructions  for  the  manufacture  of  said 
cheeses,  or  either  of  them,  to  any  and  all  persons  other  than  the  above- 
named  parties  of  the  second  part,  [plaintiffs,]  and  will  also,  after  the 
first  day  of  April,   1885,  refrain   from  engaging  in  the  business  of 
making,  manufacturing,  or  vending  of  said  cheeses,  or  either  of  them, 
and  from  the  use  of  the  trade-marks  or  names,  or  either  of  them, 
hereby  agreed  to  be  transferred  in  connection  with  said  cheeses,  or 
either  of  them,  or  with  any  similar  product,  under  the  penalty  of  five 
thousand  dollars,  which  is  hereby  named  as  stipulated  damages  to  be 
paid  by  the  party  of  the  first  part,  [defendant,]  or  her  heirs,  execu- 
tors, administrators,  or  assigns,  in  case  of  a  violation  by  the  party  of 
the  first  part   [defendant]   of  this  covenant,  of  this  contract,  or  any 
part  thereof,  within  five  years  from  the  date  hereof."     She  further 
covenanted  that  she  herself,  as  well  as  "said   Conrad   Gross,  John 
Hoffman,  and  August  Gross,  during  and  up  to  and  until  the  first  day 
of  May,   1885,  shall  continue  and  remain  in  said  county  of  Orange, 
and  from  time  to  time,  and  at  all  reasonable  times  during  said  period, 
by  herself,  or  by  said   Conrad   Gross,  John   Hoffman,   and   August 
Gross,  whenever  so  requested  by  the  said  parties  of  the  second  part, 
[plaintiffs,]   impart  to  them,  or  either  of  them,  the  secret  of  making 
such   cheeses,   and  each   of   them,  and   instruct   them,   and   each   of 
them,  in  the  process  of  manufacturing  the  same,  and  each  of  them, 
as  fully  as  she  or  the  said  Conrad  Gross,  John  Hoffman,  or  ^August 
Gross,  or  either  of  them,  are  informed  concerning  the  same." 

Both  parties  appear  to  have  duly  kept  and  performed  the  agree- 
ment, except  that,  as  the  trial  court  found,  "subsequently  to  the  1st 
day  of  May,  1885,  Conrad  Gross,  the  husband  of  defendant,  went  to 
New  York  city,  and  engaged  in  the  business  of  selling  'foreign  and 
domestic  fruits,  and  all  kinds  of  cheese  and  sausages,  &c.,'  ♦  .♦  * 
and  while  so  engaged  *  *  *  sold  and  personally  delivered  from 
his  place  of  business  to  one  John  Wassung   three   boxes  of   cheese 


272  LEGALITY  OP  OBJECT 

marked  and  named  'Fromage  d'Isigny,'  and  having  substantially  the 
same  trade-marks  thereon  as  that  sold  by  defendant  to  plaintiffs,  and 
having  stamped  thereon  the  name  'Fromage  d'Isigny,'  and  that  saidi 
cheese  so  sold  by  him  to  said  Wassung  was  a  similar  product  to  that 
formerly  manufactured  by  defendant."  Also,  that  "said  August 
Gross,  the  brother-in-law  of  defendant,  subsequent  to  the  1st  day 
of  May,  1885,  engaged  in  the  business  of  retailing  fancy  groceries  in 
the  city  of  New  York,  and  in  and  during  the  fall  of  1887,  and  prior 
to  the  commencement  of  this  action,  kept  for  sale  at  his  place  of 
business  in  New  York  city  boxes  of  cheese  marked  or  stamped  'From- 
age d'Isigny.'  "  The  court  further  found  that  the  cheese  so  sold  by 
Conrad  Gross  under  the  name  of  "Fromage  d'Isigny,"  "was  never 
sold  by  plaintiffs,  nor  made  or  manufactured  by  them,  or  either  of 
them,  but  that  the  same  was  a  similar  product." 

The  court  found  as  conclusions  of  law  that  said  agreement  was 
a  reasonable  one,  and  was  founded  upon  a  good  and  sufficient  con- 
sideration; that  said  sale  by  Conrad  and  said  keeping  for  sale  by 
August  Gross  was  a  direct  violation  of  the  covenant  in  question ;  that 
the  restriction  imposed  was  no  more  than  the  interests  of  the  parties 
required,  and  that  it  wzs  not  in  restraint  of  trade  or  against  public 
policy.  Judgment  was  ordered  for  the  plaintiffs  for  the  sum  of 
$5,000  as  stipulated  damages. 

Vann,  J.  (after  stating  the  facts).  The  business  carried  on  by  the 
defendant  was  founded  on  a  secret  process  known  only  to  herself  and 
her  agents.  She  had  the  right  to  continue  the  business,  and  by  keep- 
ing her  secret  to  enjoy  its  benefits  to  any  practicable  extent.  She 
also  had  the  right  to  sell  the  business,  including  as  an  essential  part 
thereof  the  secret  process,  and,  in  order  to  place  the  purchasers  in 
the  same  position  that  she  occupied,  to  promise  to  divulge  the  secret 
to  them  alone,  and  to  keep  it  from  every  one  else.  In  no  other  way 
could  she  sell  what  she  had,  and  get  what  it  was  worth.  Having  the 
right  to  make  this  promise,  she  also  had  the  right  to  make  it  good  to 
her  vendees,  and  to  protect  them  by  covenants  with  proper  safe- 
guards against  the  consequences  of  any  violation.  Such  a  contract 
simply  left  matters  substantially  as  they  were  before  the  sale,  except 
that  the  seller  of  the  secret  had  agreed  that  she  would  not  destroy  its 
value  after  she  had  received  full  value  for  it.  The  covenant  was 
not  in  general  restraint  of  trade,  but  was  a  reasonable  measure  of 
mutual  protection  to  the  parties,  as  it  enabled  the  one  to  sell  at  the 
highest  price,  and  the  other  to  get  what  they  paid  for.  It  imposed 
no  restriction  upon  either  that  was  not  beneficial  to  the  other,  by 
enhancing  the  price  to  the  seller,  or  protecting  the  purchaser.  Re- 
cent cases  make  it  very  clear  that  such  an  agreement  is  not  opposed 
to  public  policy,  even  if  the  restriction  was  unlimited  as  to  both  time 
and  territory.  Match  Co.  v.  Roeber,  106  N.  Y.  473,  13  N.  E.  419, 
60  Am.  Rep.  464;  Hodge  v.  Sloan,  107  N.  Y.  244,  17  N.  E.  335,  1 
Am.  St.  Rep.  816;   Leslie  v.  Lorillard,  110  N.  Y.  519,  534,  18  N.  E. 


AGREEMENTS   CONTRAET   TO   PUBLIC  POLIOT  273 

363,  1  L.  R.  A.  456;  Thermometer  Co.  v.  Pool,  51  Hun,  157,  4  N. 
Y.  Supp.  861.  The  restriction  under  consideration,  however,  was  not 
unlimited  as  to  time. 

The  chief  reliance  of  the  defendant  in  this  court,  where  the  point 
seems  to  have  been  raised  for  the  first  time,  is  that  the  covenant,  so 
far  as  stipulated  damages  are  concerned,  is  confined  to  the  personal 
acts  of  Mrs.  Gross,  and  does  not  embrace  the  acts  of  her  agents.  A 
careful  reading  of  the  agreement,  however,  in  the  light  of  the  cir- 
cumstances surrounding  the  parties  when  it  was  made,  shows  that 
no  such  result  was  intended.  What  was  the  object  of  the  covenant? 
It  was  to  keep  secret,  at  all  hazards,  the  process  upon  which  the 
success  of  the  business  depended.  On  no  other  basis  could  the  plain- 
tiffs safely  buy,  or  the  defendant  sell,  for  what  her  property  was 
worth.  Who  had  the  power  to  keep  the  process.*secret?  Clearly  the 
defendant,  if  any  one,  as  she  had  confided  it  to  no  one  except  her 
trusted  agents,  who  were  nearly  related  to  her  by  blood  or  marriage. 
But  could  she  covenant  against  the  acts  of  those  over  whom  she  had 
no  control?  She  had  the  right  to  so  covenant,  by  assuming  the  risk 
of  their  actions ;  and,  unless  she  had  done  so,  presumptively  she  could 
not  have  sold  her  factory  for  so  large  a  sum.  It  was  safer  for  her 
to  sell  with  such  a  covenant  than  it  was  for  the  plaintiflfs  to  buy 
without  it.  She  could  exercise  some  power  over  her  own  husband 
and  her  father  and  her  husband's  brother,  all  of  whom  had  been  as- 
sociated with  her  in  carrying  on  the  business,  and  whose  actions  in 
certain  other  respects  she  assumed  to  control  for  a  limited  time, 
whereas  the  plaintiffs  were  powerless,  unless  they  had  her  promise 
to  keep  the  process  secret  at  the  peril  of  paying  heavily  if  she  did  not. 
It  is  not  surprising,  therefore,  to  find  that  the  restrictive  part  of  the 
covenant  applies  with  the  same  force  to  her  agents  that  it  does  to  her- 
self; for  she  undertakes  that  neither  she  nor  they  will  disclose  the 
secret,  or  engage  in  making  or  selling  either  kind  of  cheese,  or  use 
the  trade-marks  or  names  connected  with  the  business. 

We  do  not  think  that  a  personal  act  of  the  defendant  is  essential  to 
a  violation  of  this  covenant  by  her ;  for  if  she  permits,  or  even  does 
not  prevent,  her  agents  from  doing  the  prohibited  acts,  the  promise 
is  broken.  While  it  is  her  exclusive  covenant,  it  relates  to  the  action 
of  others;  and,  if  they  do  what  she  agreed  that  they  would  not  do, 
it  is  a  breach  by  her,  although  not  her  own  act.  She  violated  her  agree- 
ment, not  by  selling  herself,  but  by  not  preventing  others  from  selling. 
This  construction  of  the  restrictive  part  of  the  covenant  would  hardl\ 
be  open  to  question,  were  it  not  that  in  the  same  sentence  occurs  the 
reparative  or  compensatory  part  designed  to  make  the  plaintiffs  whole 
if  the  defendant  either  could  not  or  did  not  keep  her  agreement. 
While  this  provides  that  any  violation  involves  the  penalty  of  $5,000, 
it  adds,  "which  sum  is  hereby  named  as  stiinilatcd  damages  to  be  paid" 
by  the  defendant  in  case  of  a  violation  by  her  of  the  covenant  in 

TlIBOCKM.CONT. — 18 


274  LEGALITY  OP  OBJECT 

question.  What  kind  of  violation  is  thus  referred  to?  The  defendant 
says  a  personal  violation  by  her  only,  but  we  think,  for  the  reasons 
already  given,  that  the  spirit  of  the  agreement  includes  both  a  viola- 
tion by  her  own  act  and  by  the  act  of  those  whom  she  did  not  pre- 
vent from  selling,  although  she  had  agreed  that  they  would  not  sell. 
As  no  one  not  a  party  to  a  contract  can  violate  it,  every  act  of  de- 
fendant's former  agents  contrary  to  her  covenant  was  a  violation 
thereof  by  her,  whether  she  knew  of  it  or  assented  to  it  or  not. 
Whenever  that  was  done  which  she  agreed  should  not  be  done,  it  was 
a  breach  of  a  covenant  by  her,  even  i'f  the  act  was  contrary  to  her 
wishes,  and  in  spite  of  her  efforts  to  prevent  it.  Her  covenant  was 
against  a  certain  act  by  any  one  of  four  persons,  including  herself. 
Two  of  those  persons  separately  did  the  act  which  she  had  agreed 
that  neither  of  them  should  do,  and  thus  there  was  a  violation  of 
the  covenant  by  her,  the  same  as  if  she  had  done  the  act  in  person. 

The  argument  of  the  learned  counsel  for  the  defendant  that  the 
contract  fixed  a  sum  to  be  paid  in  case  of  a  violation  by  the  defend- 
ant, but  not  in  case  of  a  violation  "by  the  other  parties,"  while  plau- 
sible, is  unsound,  for  there  were  no  "other  parties"  who  could  break 
the  covenant.  She  was  the  sole  covenantor,  and  unless  she  kept  the 
covenant  she  broke  it;  and  she  did  not  keep  it.  As  the  actual  dam- 
ages for  a  breach  of  the  covenant  would  necessarily  be  "wholly  un- 
certain, and  incapable  of  being  ascertained  except  by  conjecture,"  we 
think  that  the  parties  intended  to  liquidate  them  when  they  provided 
that  the  sum  named  should  be  "as  stipulated  damages."  The  use  of 
the  word  "penalty"  under  the  circumstances  is  not  controlling.  Bag- 
ley  V.  Peddie,  16  N.  Y.  469,  69  Am.  Dec.  713 ;  Dakin  v.  Williams,  17 
Wend.  448,  affirmed  22  Wend.  201 ;   Wooster  v.  Kisch,  26  Hun,  61. 

As  there  is  no  other  question  that  requires  discussion,  the  judg- 
ment should  be  affirmed,  with  costs.  All  concur,  except  Brown,  J., 
not  sitting. 


9.  Unlawful  Combinations,   Monopolisis,  Trusts,  Etc. 


STA.NDARD  OIL  CO.  OF  NEW  JERSEY  et  al.  v.  UNITED 

STATES. 

(Supreme  Court  of  The  United  States,  1910.     221  U.  S.  1,  31  Sup.  Ct.  502, 
55  L.  Ed.  619,  34  L.  R.  A.   [N.  S.]  834.) 

Mr.  Chief  Justice  White'  delivered  the  opinion  of  the  court: 
The  Standard  Oil  Company  of  New  Jersey  and  thirty-three  other 
corporations,  John  D.  Rockefeller,  William  Rockefeller,  and  five  oth- 

»  The  opinion  of  Mr.  Justice  White  is  greatly  abridged  and  the  dissenting 
opinion  of  Mr.  Justice  Harlan  is  omitted. 


AGREEMENTS   CONTRARY   TO   PUBLIC   POLICY  275 

er  individual  defendants,  prosecute  this  appeal  to  reverse  a  decree 
of  the  court  below.  Such  decree  was  entered  upon  a  bill  filed  by 
the  United  States  under  authority  of  section  4  of  the  act  of  July  2, 
1890  (26  Stat.  209,  c.  647  [U.  S.  Comp.  St.  1901,  p.  3201]),  known  as 
the  anti-trust  act,  and  had  for  its  object  the  enforcement  of  the  pro- 
visions of  that  act.     *     ♦     * 

Both  as  to  the  law  and  as  to  the  facts,  the  opposing  contentions 
pressed  in  the  argument  are  numerous,  and  in  all  their  aspects  are 
so  irreconcilable  that  it  is  difficult  to  reduce  them  to  some  funda- 
mental generalization,  which,  by  being  disposed  of,  would  decide  them 
all.     *     *     * 

Duly  appreciating  the  situation  just  stated,  it  is  certain  that  only 
one  point  of  concord  between  the  parties  is  discernible,  which  is,  that 
the  controversy  in  every  aspect  is  controlled  by  a  correct  conception 
of  the  meaning  of  the  first  and  second  sections  of  the  anti-trust  act. 
We  shall  therefore — departing  from  what  otherwise  would  be  the 
natural  order  of  analysis — ^make  this  one  point  of  harmony  the  initial 
basis  of  our  examination  of  the  contentions,  relying  upon  the  con- 
ception that  by  doing  so  some  harmonious  resonance  may  result  ade- 
quate to  dominate  and  control  the  discord  with  which  the  case 
abounds.  That  is  to  say,  we  shall  first  come  to  consider  the  meaning 
of  the  first  and  second  sections  of  the  anti-trust  act  by  the  text,  and 
after  discerning  what  by  that  process  appears  to  be  its  true  meaning, 
we  shall  proceed  to  consider  the  respective  contentions  of  the  par- 
ties concerning  the  act,  the  strength  or  weakness  of  those  contentions, 
as  well  as  the  accuracy  of  the  meaning  of  the  act  as  deduced  from 
the  text  in  the  light  of  the  prior  decisions  of  this  court  concerning  it. 
When  we  have  done  this,  we  shall  then  approach  the  facts. 

Following  this  course,  we  shall  make  our  investigation  under  four 
separate  headings:  First.  The  text  of  the  first  and  second  sections 
of  the  act,  originally  considered,  and  its  meaning  in  the  light  of  the 
common  law  and  the  law  of  this  country  at  the  time  of  its  adoption. 
Second.  The  contentions  of  the  parties  concerning  the  act,  and  the 
scope  and  effect  of  the  decisions  of  this  court  upon  which  they  rely. 
Third.  The  application  of  the  statute  to  facts ;  and.  Fourth.  The 
remedy,  if  any,  to  be  afforded  as  the  result  of  such  application. 

First.  The  text  of  the  act  and  its  meaning. 

Wie  quote  the  text  of  the  first  and  second  sections  of  the  act,  as 
follows : 

"Section  1.  Every  contract,  combination  in  the  form  of  trust  or 
otherwise,  or  conspiracy,  in  restraint  of  trade  or  commerce  among  the 
several  states  or  with  foreign  nations,  is  hereby  declared  to  be  il- 
legal. Every  person  who  shall  make  any  such  contract,  or  engage 
in  any  such  combination  or  consj)iracy,  shall  be  deemed  guilty  of  a 
misdemeanor,  and,  on  conviction  thereof,  shall  be  punished  by  fine 
not  exceeding  $5,000,  or  by  imprisonment  not  exceeding  one  year, 
or  by  both  said  punishments,  in  tiie  discretion  of  the  court. 


276  LEGALITY   OF  OBJECT 

"Sec.  2.  Every  person  who  shall  monopolize,  or  attempt  to  mono- 
polize, or  combine  or  conspire  with  any  other  person  or  persons  to 
monopolize,  any  part  of  the  trade  or  commerce  among  the  several 
states,  or  with  foreign  nations,  shall  be  deemed  guilty  of  a  misde- 
meanor, and,  on  conviction  thereof,  shall  be  punished  by  fine  not  ex- 
ceeding $5,000,  or  by  imprisonment  not  exceeding  one  year,  or  by 
both  said  punishments,  in  the  discretion  of  the  court."  26  Stat,  209, 
c.  647  (U.  S.  Comp.  St.  1901,  p.  3200). 

The  debates  show  that  doubt  as  to  whether  there  was  a  common^ 
law  of  the  United  States  which  governed  the  subject  in  the  absence^ 
of  legislation  was  among  the  influences  leading  to  the  passage  of  the 
act.  They  conclusively  show,  however,  that  the  main  cause  which 
led  to  the  legislation  was  the  thought  that  it  was  required  by  the 
economic  condition  of  the  times;  that  is,  the  vast  accumulation  of 
wealth  in  the  hands  of  corporations  and  individuals,  the  enormous 
development  of  corporate  oganization,  the  facility  for  combination 
which  such  organizations  afforded,  the  fact  that  the  facility  was  be- 
ing used,  and  that  combinations  known  as  trusts  were  being  multi- 
plied, and  the  widespread  impression  that  their  power  had  been  and 
would  be  exerted  to  oppress  individuals  and  injure  the  public  gen- 
erally. Although  debates  may  not  be  used  as  a  means  for  interpret- 
ing a  statute  (United  States  v.  Trans-Missouri  Freight  Ass'n,  166  U. 
S.  318,  17  Sup.  Ct.  548,  41  L.  Ed.  1019,  and  cases  cited),  that  rule, 
in  the  nature  of  things,  is  not  violated  by  resorting  to  debates  as 
a  means  of  ascertaining  the  environment  at  the  time  of  the  enact- 
ment of  a  particular  law;  that  is,  the  history  of  the  period  when  it 
was  adopted 

There  can  be  no  doubt  that  the  sole  subject  with  which  the  first 
section  deals  is  restraint  of  trade  as  therein  contemplated,  and  that 
the  attempt  to  monopolize  and  monopolization  is  the  subject  with 
which  the  second  section  is  concerned.  It  is  certain  that  those  terms, 
at  least  in  their  rudimentary  meaning,  took  their  origin  in  the  com- 
mon law,  and  were  also  familiar  in  the  law  of  this  country  prior 
to  and  at  the  time  of  the  adoption  of  the  act  in  question. 

We  shall  endeavor,  then  first,  to  seek  their  meaning,  not  by  in- 
dulging in  an  elaborate  and  learned  analysis  of  the  English  law  and 
of  the  law  of  this  country,  but  by  making  a  very  brief  reference  to 
the  elementary  and  indisputable  conceptions  of  both  the  English  and 
American  law  on  the  subject  prior  to  the  passage  of  the  anti-trust 
act.     ♦     *     * 

Generalizing  these  considerations,  the  situation  is  this:  1.  That  by 
the  common  law,  monoj)olies  were  unlawful  because  of  their  restric- 
tion upon  individual  freedom  of  contract  and  their  injury  to  the 
public.  2.  That  as  to  necessaries  of  life,  the  freedom  of  the  in- 
dividual to  deal  was  restricted  where  the  nature  and  character  of 
the  dealing  was  such  as  to  engender  the  presumption  of  intent  to 
bring  about  at  least  one  of  the  injuries  which  it  was  deemed  would 


AGREEMENTS   CONTRARY    TO    PUBLIC   POLICY  277 

result  from  monopoly, — that  is,  an  undue  enhancement  of  price. 
3.  That  to  protect  the  freedom  of  contract  of  the  individual,  not  only 
in  his  own  interest,  but  principally  in  the  interest  of  the  common 
weal,  a  contract  of  an  individual  by  which  he  put  an  unreasonable 
restrain  upon  himself  as  to  carrying  on  his  trade  or  business  was 
void.  And  that  at  common  law  the  evils  consequent  upon  engrossing, 
etc.,  caused  those  things  to  be  treated  as  coming  within  monopoly  and 
sometimes  to  be  called  monopoly,  and  the  same  considerations  caused 
monopoly,  because  of  its  operation  and  effect,  to  be  brought  within 
and  spoken  of  generally  as  impeding  the  due  course  of,  or  being  in 
restraint  of,  trade. 

From  the  development  of  more  accurate  economic  conceptions  and 
the  changes  in  conditions  of  society,  it  came  to  be  recognized  that  the 
acts  prohibited  by  the  engrossing,  forestalling,  etc.,  statutes  did  not 
have  the  harmful  tendency  which  they  were  presumed  to  have  when 
the  legislation  concerning  them  was  enacted,  and  therefore  did  not 
justify  the  presumption  which  had  previously  been  deduced  from 
them,  but,  on  the  contrary,  such  acts  tended  to  fructify  and  develop 
trade.  See  the  statutes  of  12  George  III,  chap.  71,  enacted  in  1772, 
and  statute  of  7  and  8  Victoria,  chap.  24,  enacted  in  1844,  repealing 
the  prohibitions  against  engrossing,  forestalling,  etc.,  upon  the  express 
ground  that  the  prohibited  acts  had  come  to  be  considered  as  favor- 
able to  the  development  of,  and  not  in  restraint  of,,  trade.  It  is  re- 
markable that  nowhere  at  common  law  can  there  be  found  a  pro- 
hibition against  the  creation  of  monopoly  by  an  individual.  This 
would  seem  to  manifest,  either  consciously  or  intuitively,  a  profound 
conception  as  to  the  inevitable  operation  of  economic  forces  and  the 
equipoise  or  balance  in  favor  of  the  protection  of  the  rights  of  in- 
dividuals which  resulted.  That  is  to  say,  as  it  was  deemed  that  mo- 
nopoly in  the  concrete  could  only  arise  from  an  act  of  sovereign  pow- 
er, and,  such  sovereign  power  being  restrained,  prohibitions  as  to 
individuals  were  directed  not  against  the  creation  of  monopoly,  but 
were  only  applied  to  such  acts  in  relation  to  particular  subjects  as 
to  which  it  was  deemed,  if  not  restrained,  some  of  the  consequences 
of  monopoly  might  result.  After  all,  this  was  but  an  instinctive 
recognition  of  the  truisms  that  the  course  of  trade  could  not  be  made 
free  by  obstructing  it,  and  that  an  individual's  right  to  trade  could 
not  be  protected  by  destroying  such  right. 

From  the  review  just  made  it  clearly  results  that  outside  of  the 
restrictions  resulting  from  the  want  of  power  in  an  individual  to 
voluntarily  and  unreasonably  restrain  his  right  to  carry  on  his  trade 
or  business,  and  outside  of  the  want  of  right  to  restrain  the  free 
course  of  trade  by  contracts  or  acts  which  implied  a  wrongful  pur- 
pose, freedom  to  contract  and  to  abstain  from  contracting,  and  to 
exercise  every  reasonable  right  incident  thereto,  became  the  rule  in 
the  English  law.  The  scope  and  effect  of  this  freedom'  to  trade  and 
contract  is  clearly  shown  by  the  decision  in  Mogul  vS.  S.  Co.  v.  Mc- 


i78  LEGALITY  OF  OBJECT 

Gregor,  [1891]  A.  C.  25,  61  L.  J.  Q.  B.  N.  S.  295,  66  L.  T.  N. 
S.  1,  40  Week.  Rep.  337,  7  Asp.  Mar.  L.  Cas.  120,  56  J.  P.  101. 
While  it  is  true  that  the  decision  of  the  House  of  Lords  in  the  case 
in  question  was  announced  shortly  after  the  passage  of  the  anti- 
trust act,  it  serves  reflexly  to  show  the  exact  state  of  the  law  in  Eng- 
land at  the  time  the  anti-trust  statute  was  enacted. 

In  this  country  also  the  acts  from  which  it  was  deemed  there  re- 
sulted a  part,  if  not  all,  of  the  injurious  consequences  ascribed  to  mo- 
nopoly, came  to  be  referred  to  as  a  monopoly  itself.  In  other  words, 
here  as  had  been  the  case  in  England,  practical  common  sense  caused 
atttention  to  be  concentrated  not  upon  the  theoretically  correct  name 
to  be  given  to  the  condition  or  acts  which  gave  rise  to  a  harmful  re- 
sult, but  to  the  result  itself  and  to  the  remedying  of  the  evils  which 
it  produced  The  statement  just  made  is  illustrated  by  an  early  stat- 
ute of  the  province  of  Massachusetts,  that  is,  chapter  31  of  the  Laws 
of  1778-1779,  by  which  monopoly  and  forestalling  were  expressly 
treated  as  one  and  the  same  thing. 

It  is  also  true  that  while  the  principles  concerning  contracts  in  re- 
straint of  trade,  that  is,  voluntary  restraint  put  by  a  person  on  his 
right  to  pursue  his  calling,  hence  only  operating  subjectively,  came 
generally  to  be  recognized  in  accordance  with  the  English  rule,  it 
came  moreover  to  pass  that  contracts  or  acts  which  it  was  considered 
had  a  monopolistic  tendency,  especially  those  which  were  thought  to 
unduly  diminish  competition  and  hence  to  enhance  prices — in  other 
words,  to  monopolize — came  also  in  a  generic  sense  to  be  spoken  of 
and  treated  as  they  had  been  in  England,  as  restricting  the  due  course 
of  trade,  and  therefore  as  being  in  restraint  of  trade.  The  dread  of 
monopoly  as  an  emanation  of  governmental  power,  while  it  passed  at 
an  early  date  out  of  mind  in  this  country,  as  a  result  of  the  structure 
of  our  government,  did  not  serve  to  assuage  the  fear  as  to  the  evil 
consequences  which  might  arise  from  the  acts  of  individuals  .produc- 
ing or  tending  to  produce  the  consequences  of  monopoly.  It  resulted 
that  treating  such  acts  as  we  have  said  as  amounting  to  monopoly, 
sometimes  constitutional  restrictions,  again  legislative  enactments  or 
judicial  decisions,  served  to  enforce  and  illustrate  the  purpose  to 
prevent  the  occurrence  of  the  evils  recognized  in  the  mother  coun- 
try as  consequent  upon  monopoly,  by  providing  against  contracts  or 
acts  of  individuals  or  combinations  of  individuals  or  corporations 
deemed  to  be  conducive  to  such  results.  To  refer  to  the  constitu- 
tional or  legislative  provisions  on  the  subject,  or  the  many  judicial 
decisions  which  illustrate  it,  would  unnecessarily  prolong  this  opin- 
ion. We  append  in  the  margin  a  note  to  treaties,  etc.,  wherein  are 
contained  references  to  constitutional  and  statutory  provisions  and  to 
numerous  decisions,  etc.,  relating  to  the  subject. 

It  will  be  found  that,  as  modern  conditions  arose,  the  trend  of  leg- 
islation and  judicial  decision  came  more  and  more  to  adapt  the  recog- 
nized  restrictions  to  new   manifestations   of  conduct   or  of   dealing 


AGREEMENTS  CONTRAEY  TO  PUBLIC  POLIOT         279 

which  it  was  thought  justified  the  inference  of  intent  to  do  the  wrong 
which  it  had  been  the  purpose  to  prevent  from  the  beginning.  The 
evolution  is  clearly  pointed  out  in  National  Cotton  Oil  Co.  v.  Texas, 
197  U.  S.  115,  25  Sup.  Ct.  379,  49  L.  Edl.  689,  and  Shawnee  Com- 
press Co.  V.  Anderson,  209  U.  S.  423,  28  Sup.  Ct.  572,  52  L.  Ed. 
865,  and,  indeed,  will  be  found  to  be  illustrated  in  various  aspects 
by  the  decisions  of  this  court  which  have  been  concerned  with  the 
enforcement  of  the  act  we  are  now  considering. 

Without  going  into  detail,  and  but  very  briefly  surveying  the  whole 
field,  it  may  be  with  accuracy  said  that  the  dread  of  enhancement  of 
prices  and  of  other  wrongs  which  it  was  thought  would  flow  from 
the  undue  limitation  on  competitive  conditions  caused  by  contracts 
or  other  acts  of  individuals  or  corporations  led,  as  a  matter  of  public 
policy,  to  the  prohibition  or  treating  as  illegal  all  contracts  or  acts 
which  were  unreasonably  restrictive  of  competitive  conditions,  either 
from  the  nature  or  character  of  the  contract  or  act,  or  where  the 
surrounding  circumstances  were  such  as  to  justify  the  conclusion  that 
they  had  not  been  entered!  into  or  performed  with  the  legitimate  pur- 
pose of  reasonably  forwarding  personal  interest  and  developing  trade, 
but,  on  the  contrary,  were  of  such  a  character  as  to  give  rise  to  the 
inference  or  presumption  that  they  had  been  entered  into  or  done 
with  the  intent  to  do  wrong  to  the  general  public  and  to  limit  the 
right  of  individuals,  thus  restraining  the  free  flow  of  commerce  and 
tending  to  bring  about  the  evils,  such  as  enhancement  of  prices,  which 
were  considered  to  be  against  public  policy.  It  is  equally  true  to 
say  that  the  survey  of  the  legislation  in  this  country  on  this  subject 
from  the  beginning  will  show,  depending,  as  it  did,  upon  the  economic 
conceptions  which  obtained  at  the  time  when  the  legislation  was 
adopted  or  judicial  decision  was  rendered,  that  contracts  or  acts 
were  at  one  time  deemed  to  be  of  such  a  character  as  to  justify  the 
inference  of  wrongful  intent  which  were  at  another  period  thought 
not  to  be  of  that  character.  But  this  again,  as  we  have  seen,  simply 
followed  the  line  of  development  of  the  law  of  England. 

Let  us  consider  the  language  of  the  first  and  second  sections,  guid- 
ed by  the  principle  that  where  words  are  employed  in  a  statute  which 
had  at  the  time  a  well-known  meaning  at  common  law  or  in  the  law 
of  this  country,  they  are  presumed  to  have  been  used  in  that  sense 
unless  the  context  compels  to  the  contrary. 

As  lO  the  first  section,  the  words  to  be  interpreted  are:  "Every  con- 
tract, combination  in  the  form  of  trust  or  otherwise,  or  conspiracy 
in  restraint  of  trade  or  commerce'  *  *  *  is  hereby  declared  to 
be  illegal."  As  there  is  no  room  for  dispute  that  the  statute  was 
intended  to  formulate  a  rule  for  the  regulation  of  interstate  and 
foreign  commerce,  the  question  is,  What  was  the  rule  which  it 
adopted  ? 

In  view  of  the  common  law  and  the  law  in  this  country  as  to  re- 
straint of  trade,  which  we  have   reviewed,  and  tlic  illuminating  ef- 


280  LEGALITY  OF  OBJECT 

feet  which  that  history  must  have  under  the  rule  to  which  we  have 
referred,  we  think  it  results : 

a.  That  the  context  manifests  that  the  statute  was  drawn  in  the 
light  of  the  existing  practical  conception  of  the  law  of  restraint  of 
trade,  because  it  groups  as  within  that  class,  not  only  contracts  which 
were  in  restraint  of  trade  in  the  subjective  sense,  but  all  contracts  or 
acts  which  theoretically  were  attempts  to  monopolize,  yet  which  in 
practice  had  come  to  be  considered  as  in  restraint  of  trade  in  a  broad 
sense. 

b.  That  in  view  of  the  many  new  forms  of  contracts  and  combina- 
tions which  were  being  evolved  from  existing  economic  conditions, 
it  was  deemed  essential  by  an  all-embracing  enumeration  to  make 
sure  that  no  form  of  contract  or  combination  by  which  an  undue 
restraint  of  interstate  or  foreign  commerce  was  brought  about  could 
save  such  restraint  from  condemnation.  The  statute  under  this  view 
evidenced  the  intent  not  to  restrain  the  right  to  make  and  enforce 
contracts,  whether  resulting  from  combinations  or  otherwise,  which 
did  not  unduly  restrain  interstate  or  foreign  commerce,  but  to  pro- 
tect that  commerce  from  being  restrained  by  methods,  whether  old 
or  new,  which  would  constitute  an  interference, — that  is,  an  undJue 
restraint. 

c.  And  as  the  contracts  or  acts  embraced  in  the  provision  were  not 
expressly  defined,  since  the  enumeration  addressed  itself  simply  to 
classes  of  acts,  those  classes  being  broad  enough  to  embrace  every  con- 
ceivable contract  or  combination  which  could  be  made  concerning  trade 
or  commerce  or  the  subjects  of  such  commerce,  and  thus  caused  any 
act  done  by  any  of  the  enumerated  methods  anywhere  in  the  whole 
field  of  human  activity  to  be  illegal  if  in  restraint  of  trade,  it  in- 
evitably follows  that  the  provision  necessarily  called  for  the  exercise 
of  judgment  which  required  that  some  standard  should  be  resorted 
to  for  the  purpose  of  determining  whether  the  prohibition  contained 
in  the  statute  had  or  had  not  in  any  given  case  been  violated.  Thus 
not  specifying,  but  indubitably  contemplating  and  requiring  a  stand- 
ard, it  follows  that  it  was  intended  that  the  standard  of  reason  which 
had  been  applied  at  the  common  law  and  in  this  country  in  dealing 
with  subjects  of  the  character  embraced  by  the  statute  was  intended 
to  be  the  measure  used  for  the  purpose  of  determining  whether,  in 
a  given  case,  a  particular  act  had  or  had  not  brought  about  the  wrong 
against  which  the  statute  provided. 

And  a  consideration  of  the  text  of  the  second  section  serves  to  estab- 
lish that  it  was  intended  to  supplement  the  first,  and  to  make  sure  that 
by  no  possible  guise  could  the  public  policy  embodied  in  the  first  sec- 
tion be  frustrated  or  evaded.  The  prohibitions  of  the  second  em- 
brace "every  person  who  shall  monopolize,  or  attempt  to  monopolize, 
or  combine  or  conspire  with  any  other  person  or  persons  to  monopo- 
lize, any  part  of  the  trade  or  commerce  among  the  several  states  or 
with  foreign  nations.     *     *     *  "     By  reference  to  the  terms  of  sec- 


AGBEEMENTS   CONTEAET   TO   PUBLIC   POLICY  281 

tion  8  it  is  certain  that  the  word  "person"  clearly  implies  a  corpora- 
tion as  well  as  an  individual. 

The  commerce  referred  to  by  the  words  "in  part,"  construed  in  the 
light  of  the  manifest  purpose  of  the  statute,  has  both  a  geographical 
and  a  distributive  significance;  that  is,  it  includes  any  portion  of 
the  United  States  and  any  one  of  the  classes  of  things  forming,  a 
part  of  interstate  or  foreign  commerce. 

Undoubtedly,  the  words  "to  monopolize"  and  "monopolize,"  as 
used  in  the  section,  reach  every  act  bringing  about  the  prohibited  re- 
sults. The  ambiguity,  if  any,  is  involved  in  determining  what  is  in- 
tended by  monopolize.  But  this  ambiguity  is  readily  dispelled  in  the 
light  of  the  previous  history  of  the  law  of  restraint  of  trade  to  which 
we  have  referred  and  the  indication  which  it  gives  of  the  practical 
evolution  by  which  monopoly  and  the  acts  which  produce  the  same 
result  as  monopoly,  that  is,  an  undue  restraint  of  the  course  of  trade, 
all  came  to  be  spoken  of  as,  and  to  be  indeed  synonymous  with,  re- 
straint of  trade.  In  other  words,  having  by  the  1st  section  forbidden 
all  means  of  monopolizing  trade,  that  is,  unduly  restraining  it  by 
means  of  every  contract,  combination,  etc.,  the  second  section  seeks, 
if  possible,  to  make  the  prohibitions  of  the  act  all  the  more  complete 
and  perfect  by  embracing  all  attempts  to  reach  the  end  prohibited  by 
the  first  section,  that  is,  restraints  of  tradle,  by  any  attempt  to  monop- 
olize, or  monopolization  thereof,  even  although  the  acts  by  which 
such  results  are  attempted  to  be  brought  about  or  are  brought  about 
be  not  embraced  within  the  general  enumeration  of  the  first  section. 
And,  of  course,  when  the  second  section  is  thus  harmonized  with  and 
made,  as  it  was  intended  to  be,  the  complement  of  the  first,  it  be- 
comes obvious  that  the  criteria  to  be  resorted  to  in  any  given  case 
for  the  purpose  of  ascertaining  whether  violations  of  the  section 
have  been  committed  is  the  rule  of  reason  guided  by  the  -established 
law  and  by  the  plain  duty  to  enforce  the  prohibitions  of  the  act,  and 
thus  the  public  policy  which  its  restrictions  were  obviously  enacted  to 
subserve. 

And  it  is  worthy  of  observation,  as  we  have  previously  remarked 
concerning  the  common  law,  that  although  the  statute,  by  the  com- 
prehensiveness of  the  enumerations  embodied  in  both  the  first  and 
second  sections,  makes  it  certain  that  its  purpose  was  to  prevent  un- 
due restraints  of  every  kind  or  nature,  nevertheless  by  the  omission 
of  any  direct  prohibition  against  monopoly  in  the  concrete,  it  indi- 
cates a  consciousness  that  the  freedom  of  the  individual  right  to  con- 
tract, when  not  unduly  or  improperly  exercised,  was  the  most  effi- 
cient means  for  the  prevention  of  monopoly,  since  the  operation  of 
the  centrifugal  and  centripetal  forces  resulting,  from  the  right  to 
freely  contract  was  the  means  by  which  monopoly  would  be  inevi- 
tably prevented  if  no  extraneous  or  sovereign  power  imposed  it  and 
no  right  to  make  unlawful  contracts  having  a  monopolistic  tendency 
were  permitted.     In  other  words,  that   freedom  to  contract  was  tJic 


282  LEGALITY  OP  OBJECT 

essence  of  freedom  from  undue  restraint  on  the  right  to  con- 
tract.    *     *     * 

We  come,  then,  to  the  third  proposition  requiring  consideration, 
viz. : 

Third.  The  facts  and  the  application  of  the  statute  to  them. 

Beyond  dispute  the  proofs  establish  substantially  as  alleged  in  the 
bill  the  following  facts: 

1.  The  creation  of  the  Standard  Oil  Company  of  Ohio. 

2.  The  organization  of  the  Standard'  Oil  Trust  of  1882,  and  also  a 
previous  one  of  1879,  not  referred  to  in  the  bill,  and  the  proceedings 
in  the  supreme  court  of  Ohio,  culminating  in  a  decree  based  upon  the 
finding  that  the  company  was  unlawfully  a  party  to  that  trust;  the 
transfer  by  the  trustees  of  stocks  in  certain  of  the  companies;  the 
contempt  proceedings ;  and,  finally,  the  increase  of  the  capital  of  the 
Standard  Oil  Company  of  New  Jersey  and  the  acquisition  by  that 
company  of  the  shares  of  the  stock  of  the  other  corporations  in  ex- 
change for  its  certificates. 

The  vast  amount  of  property  and  the  possibilities  of  far-reaching 
control  which  resulted  from  the  facts  last  stated  are  shown  by  the 
statement  which  we  have  previously  annexed  concerning  the  parties 
to  the  trust  agreement  of  1882,  and  the  corporations  whose  stock  was 
held  by  the  trustees  under  the  trust,  and  which  came  therefore  to  be 
held  by  the  New  Jersey  corporation.  But  these  statements  do  not  with 
accuracy  convey  an  appreciation  of  the  situation  as  it  existed  at  the 
time  of  the  entry  of  the  decree  below,  since,  during  the  more  than  ten 
years  which  elapsed  between  the  acquiring  by  the  New  Jersey  cor- 
poration of  the  stock  and  other  property  which  was  formerly  held  by 
the  trustees  under  the  trust  agreement,  the  situation,  of  course,  had 
somewhat  changed, — a  change  which,  when  analyzed  in  the  light  of 
the  proof,  we  think  establishes  that  the  result  of  enlarging  the  capital 
stock  of  the  New  Jersey  company  and  giving  it  the  vast  power  to 
which  we  have  referred  produced  its  normal  consequence;  that  is,  it 
gave  to  the  corporation,  despite  enormous  dividends  and  despite  the 
dropping  out  of  certain  corporations  enumerated  in  the  decree  of  the 
court  below,  an  enlarged  and  more  perfect  sway  and  control  over  the 
trade  and  commerce  in  petroleum  and  its  products.  The  ultimate 
situation  referred  to  will  be  made  manifest  by  an  examination  of 
sections  2  and  4  of  the  decree  below,  which  are  excerpted  in  the 
margin. 

Giving  to  the  facts  just  stated  the  weight  which  it  was  deemed  they 
were  entitled  to,  in  the  light  afforded  by  the  proof  of  other  cognate 
facts  and  circumstances,  the  court  below  held  that  the  acts  and  deal- 
ings established  by  the  proof  operated  to  destroy  the  "potentiality  of 
competition"  which  otherwise  would  have  existed  to  such  an  extent  as 
to  cause  the  transfers  of  stock  which  were  made  to  the  New  Jersey 
Corporation  and  the  control  which  resulted  over  the  many  and  various 
subsidiary  corporations  to  be  a  combination  or  conspiracy  in  restraint: 


AGREEMENTS   CONTEABY   TO   PUBLIC   POLICY  283 

of  trade,  in  violation  of  the  first  section  of  the  act,  but  also  to  be  an 
attempt  to  monopolize  and  monopolization  bringing  about  a  perennial 
violation  of  the  second  section. 

We  see  no  cause  to  doubt  the  correctness  of  these  conclusions,  con- 
sidering the  subject  from  every  aspect;  that  is,  both  in  view  of  the 
facts  established  by  the  record  and  the  necessary  operation  and  effect 
of  the  law  as  we  have  construed  it  upon  the  inferences  deducible  from 
the  facts,  for  the  following  reasons : 

a.  Because  the  unification  of  power  and  control  over  petroleum  and 
its  products  which  was  the  inevitable  result  of  the  combining  in  the 
New  Jersey  corporation  by  the  increase  of  its  stock  and  the  transfer 
to  it  of  the  stocks  of  so  many  other  corporations,  aggregating  so  vast 
a  capital,  gives  rise,  in  and  of  itself,  in  the  absence  of  countervailing 
circumstances,  to  say  the  least,  to  the  prima  facie  presumption  of  in- 
tent and  purpose  to  maintain  the  dominancy  over  the  oil  industry,  not 
as  a  result  of  normal  methods  of  industrial  development,  but  by  new 
means  of  combination  which  were  resorted  to  in  order  that  greater 
power  might  be  added  than  would  otherwise  have  arisen  had  normal 
methods  been  followed,  the  whole  with  the  purpose  of  excluding  oth- 
ers from  the  trade,  and  thus  centralizing  in  the  combination  a  per- 
petual control  of  the  movements  of  petroleum  and  its  products  in  the 
channels  of  interstate  commerce. 

b.  Because  the  prima  facie  presumption  of  intent  to  restrain  trade, 
to  monopolize  and  to  bring  about  monopolization,  resulting  from  the 
act  of  expanding  the  stock  of  the  New  Jersey  corporation  and  vesting 
it  with  such  vast  control  of  the  oil  industry,  is  made  conclusive  by 
considering  (1)  the  conduct  of  the  persons  or  corporations  who  were 
mainly  instrumental  in  bringing  about  the  extension  of  power  in  the 
New  Jersey  corporation  before  the  consummation  of  that  result  and 
prior  to  the  formation  of  the  trust  agreements  of  1879  and  1882;  (2) 
by  considering  the  proof  as  to  what  was  done  under  those  agreements 
and  the  acts  which  immediately  preceded  the  vesting  of  power  in 
the  New  Jersey  corporation,  as  well  as  by  weighing  the  modes  in 
which  the  power  vested  in  that  corporation  has  been  exerted  and  the 
results  which  have  arisen  from  it. 

Recurring  to  the  acts  done  by  the  individuals  or  corporations  who 
were  mainly  instrumental  in  bringing  about  the  expansion  of  the  New 
Jersey  corporation  during  the  period  prior  to  the  formation  of  the  trust 
agreements  of  1879  and  1882,  including  those  agreements,  not  for  the 
purpose  of  weighing  the  substantial  merit  of  the  numerous  charges 
of  wrongdoing  made  during  such  period,  but  solely  as  an  aid  for  dis- 
covering intent  and  purpose,  we  think  no  disinterested  mind  can  sur- 
vey the  period  in  question  without  being  irresistibly  driven  to  the  con- 
clusion that  the  very  genius  for  commercial  development  and  organ- 
ization which  it  would  seem  was  manifested  from  the  beginning  soon 
begot  an  intent  and  purpose  to  exclude  others  which  was  frequently 
manifested  by  acts  and  dealings  wholly  inconsistent  with  the  theory 


284  LEGALITY  OP  OBJECT 

that  they  were  made  with  the  single  conception  of  advancing  the  de- 
velopment of  business  power  by  usual  methods,  but  which,  on  the  con- 
trary, necessarily  involved  the  intent  to  drive  others  from  the  field 
and  to  exclude  them  from  their  right  to  trade,  and  thus  accomplish 
the  mastery  which  was  the  end  in  view.  And,  considering  the  period 
from  the  date  of  the  trust  agreements  of  1879  and  1882,  up  to  the 
time  of  the  expansion  of  the  New  Jersey  corporation,  the  gradual  ex- 
tension of  the  power  over  the  commerce  in  oil  which  ensued,  the  deci- 
sion of  the  supreme  court  of  Ohio,  the'  tardiness  or  reluctance  in  con- 
forming to  the  commands  of  that  decision,  the  methods  first  adopted 
and  that  which  finally  culminated  in  the  plan  of  the  New  Jersey  cor- 
poration, all  additionally  serve  to  make  manifest  the  continued  exist- 
ence of  the  intent  which  we  have  previously  indicated,  and  which, 
among  other  things,  impelled  the  expansion  of  the  New  Jersey  corpo- 
ration. 

The  exercise  of  the  power  which  resulted  from  that  organization 
fortifies  the  foregoing  conclusions,  since  the  development  which  came, 
the  acquisition  here  and  there  which  ensued  of  every  efficient  means 
by  which  competition  could  have  been  asserted,  the  slow  but  resist- 
less methods  which  followed  by  which  means  of  transportation  were 
absorbed  and  brought  under  control,  the  system  of  marketing  which 
was  adopted  by  which  the  country  was  divided  into  districts  and  the 
trade  in  each  district  in  oil  was  turned  over  to  a  designated  corpora- 
tion within  the  combination,  and  all  others  were  excluded,  all  lead  the 
mind  up  to  a  conviction  of  a  purpose  and  intent  which  we  think  is  so 
certain  as  practically  to  cause  the  subject  hot  to  be  within  the  domain 
of  reasonable  contention. 

The  inference  that  no  attempt  to  monopolize  could  have  been  in- 
tended, and  that  no  monopolization  resulted  from  the  acts  complained 
of,  since  it  is  established  that  a  very  small  percentage  of  the  crude  oil 
produced  was  controlled  by  the  combination,  is  unwarranted.  As  sub- 
stantial power  over  the  crude  product  was  the  inevitable  result  of 
the  absolute  control  which  existed  over  the  refined  product,  the  mo- 
nopolization of  the  one  carried  with  it  the  power  to  control  the  other; 
and  if  the  inferences  which  this  situation  suggests  were  developed, 
which  we  deem  it  unnecessary  to  do,  they  might  well  serve  to  add 
additional  cogency  to  the  presumption  of  intent  to  monopolize  which 
we  have  found  arises  from  the  unquestioned  proof  on  other  subjects. 

We  are  thus  brought  to  the  last  subject  which  we  are  called  upon 
to  consider,  viz. : 

Fourth.  The  remedy  to  be  administered. 

It  may  be  conceded  that  ordinarily  where  it  was  found  that  acts 
had  been  done  in  violation  of  the  statute,  adequate  measure  of  relief 
would  result  from  restraining  the  doing  of  such  acts  in  the  future. 
Swift  &  Co.  V.  United  States,  196  U.  S.  375,  25  Sup.  Ct.  276,  49  L. 
Ed.  518.  But  in  a  case  like  this,  where  the  condition  which  has  been 
brought  about  in  violation  of  the  statute,  in  and  of  itself  is  not  only 


AQBEEMENTS   CONTRARY   TO   PUBLIC    POLICY  285 

a  continued  attempt  to  monopolize,  but  also  a  monopolization,  the 
duty  to  enforce  the  statute  requires  the  application  of  broader  and 
more  controlling  remedies.  As  penalties  which  are  not  authorized  by 
law  may  not  be  inflicted  by  judicial  authority,  it  follows  that  to  meet 
the  situation  with  which  we  are  confronted  the  application  of  remedies 
two- fold  in  character  becomes  essential:  (1)  To  forbid  the  doing  in 
the  future  of  acts  like  those  which  we  have  found  to  have  been  done 
in  the  past  which  would  be  violative  of  the  statute.  (2)  The  exer- 
tion of  such  measure  of  relief  as  will  effectually  dissolve  the  combina- 
tion found  to  exist  in  violation  of  the  statute,  and  thus  neutralize  the 
extension  and  continually  operating  force  which  the  possession  of 
the  power  unlawfully  obtained  has  brought  and  will  continue  to  bring 
about. 

In  applying  remedies  for  this  purpose,  however,  the  fact  must  not 
be  overlooked  that  injury  to  the  public  by  the  prevention  of  an  undue 
restraint  on,  or  the  monopolization  of,  trade  or  commerce,  is  the 
foundation  upon  which  the  prohibitions  of  the  statute  rest,  and  more- 
over that  one  of  the  fundamental  purposes  of  the  statute  is  to  protect, 
not  to  destroy,  rights  of  property. 

Let  us,  then,  as  a  means  of  accurately  determining  what  relief  we 
are  to  afford,  first  come  to  consider  what  relief  was  afforded  by  the 
court  below,  in  order  to  fix  how  far  it  is  necessary  to  take  from  or 
add  to  that  relief,  to  the  end  that  the  prohibitions  of  the  statute  may 
have  complete  and  operative  force.     *     *     * 

So  far  as  the  decree  held  that  the  ownership  of  the  stock  of  the  New 
Jersey  corporation  constituted  a  combination  in  violation  of  the  first 
section  and  an  attempt  to  create  a  monopoly  or  to  monopolize  under 
the  second  section,  and  commanded  the  dissolution  of  the  combina- 
tion, the  decree  was  clearly  appropriate.  And  this  also  is  true  of  sec- 
tion 5  of  the  decree,  which  restrained  both  the  New  Jersey  corporation 
and  the  subsidiary  corporations  from  doing  anything  which  would  rec- 
ognize or  give  effect  to  further  ownership  in  the  New  Jersey  corpora- 
tion of  the  stocks  which  were  ordered  to  be  retransferred.     *     *     ''•' 

Our  conclusion  is  that  the  decree  below  was  right  and  should  be 
affirmed,  except  as  to  the  minor  matters  concerning  which  we  have 
indicated  the  decree  should  be  modified.  Our  order  will  therefore 
be  one  of  affirmance,  with  directions,  however,  to  modify  the  decree 
in  accordance  with  this  opinion.  The  court  below  to  retain  jurisdic- 
tion to  the  extent  necessary  to  compel  compliance  in  every  respect  with 
its  decree.    And  it  is  so  ordered. 

Mr.  Justice  Harlan  concurred  in  part  and  dissented  in  part. 


28S  LEGALITY  OF  OBJECT 


10.  Exempting  f'rom  Liability  for  NegIvIGencb 


JAMES  QUIRK   MILLING  CO.  v.  MINNEAPOLIS  &  ST.  L. 

R.  CO. 

(Supreme  Court  of  Minnesota,  1906.     98  Minn,  22,  107  N.  W.  742, 
116  Am.  St   Rep.  336.) 

Action  by  the  James  Quirk  Milling  Company  against  the  Minne- 
apolis &  St.  Louis  Railroad  Company.  From  an  order  sustaining  a 
demurrer  to  the  complaint,  plaintiff  appeals. 

Eluott,  J.  The  appellant  under  a  contract  with  the  railway  com- 
pany erected  a  grain  elevator  upon  its  right  of  way.  The  building 
was  destroyed  by  fire  negligently  scattered  by  the  company's  locomo- 
tives. The  action  was  brought  to  recover  the  resulting  damages,  and 
the  trial  court  sustained  a  demurrer  to  the  complaint.  The  appeal 
is  from  this  order. 

The  elevator  was  constructed!  under  a  contract  between  the  parties 
which  contained  the  following  provision :  "In  consideration  of  the 
rights  hereby  acquired  the  second  party  agrees  *  *  *  to  protect, 
save  harmless,  and  indemnify  the  railway  company,  its  successors 
and  assigns,  from  liability  to  any  person,  corporation,  or  company, 
for  or  on  account  of  any  loss  or  damage  by  fire  communicated  by  or 
escaping  from  any  locomotive,  engine,  or  car,  or  resulting  in  any  man- 
ner from  the  construction  or  operation  of  said  track." 

The  appellant  contends  that  this  contract  is  against  public  policy 
and  therefore  void.  This  involves  the  denial  of  the  right  of  the  par- 
ties to  enter  into  such  agreement.  Public  policy  requires  that  the 
right  to  contract  shall  be  preserved  inviolate  in  ordinary  cases.  It 
is  denied  only  when  the  particular  contract  violates  some  principle 
which  is  of  even  more  importance  to  the  general  public. 

As  said  by  Sir  George  Jessel,  M.  R.,  in  Printing,  etc.,  Co.  v.  Samp- 
son, L.  R.  19  Eq.  462,  465,  44  L.  J.  Ch.  705 :  "It  must  not  be  for- 
gotten that  you  are  not  to  extend  arbitrarily  those  rules  which  say 
that  a  given  contract  is  void  as  being  against  the  public  policy,  be- 
cause, if  there  is  one  thing  which,  more  than  another,  public  policy 
requires,  it  is  that  men  of  full  age  and  competent  understanding 
shall  have  the  utmost  liberty  of  contracting,  and  that  their  contracts, 
when  entered  into  freely  and  voluntarily,  shall  be  held  sacred  and 
shall  be  enforced  by  the  courts  of  justice.  Therefore  you  have  this 
paramount  public  policy  to  consider,  that  you  are  not  likely  to  in- 
terfere with  the  freedom  of  contract." 

In  Baltimore,  etc.,  Ry.  Co.  v.  Voigt,  176  U.  S.  505,  20  Sup.  Ct. 
387,  44  L.  Ed.  560,  the  court  said :  "It  must  not  be  forgotten  that  the 
right  of  private  contract  is  no  small  part  of  the  liberty  of  the  citizen. 


AGEEEMENTS  CONTRAEY  TO  PUBLIC  POLICY         287 

and  that  the  usual  and  most  important  function  of  courts  of  Justice 
is  rather  to  maintain  and  enforce  contracts  than  to  enable  parties 
thereto  to  escape  from  their  obligations  on  the  pretext  of  public 
policy,  unless  it  clearly  appears  that  they  contravene  public  right  or 
the  public  welfare." 

It  follows  that  the  party  who  asserts  that  a  particular  contract  is 
against  public  policy  has  the  burden  of  proving  the  same.  Printing, 
etc.,  Co.  V.  Sampson,  supra;  Rousillion  v.  Rousillion,  14  Ch.  Div.  351 ; 
U.  S.  V.  Trans-Missouri,  etc.,  Co.,  58  Fed.  58,  7  C.  C.  A.  15,  24  L.  R. 
A.  73 ;  Hartford  Fire  Ins.  Co.  v.  Chicago  Railway,  etc.,  Co.,  70  Fed. 
201,  17  C.  C.  A.  62,  30  L.  R.  A.  193;  Stewart  v.  Transportation  Co., 
17  Minn.  372  (Gil.  348). 

The  appellant  assumes  that  there  is  a  general  rule  of  law  which 
forbids  a  party  to  protect  himself  by  contract  against  damages  result- 
ing from  his  own  negligence.  But  this  is  true  only  when  the  contract 
protects  him  against  the  consequences  of  a  breach  of  some  duty  which 
is  imposed  by  law.  Generally  a  person  may  waive  the  right  of  action 
which  he  has  against  another  for  an  injury  received  from  the  neg- 
ligence of  the  latter,  provided  the  contract  of  waiver  is  supported  by 
a  consideration  deemed  valuable  by  law  and  procured  without  mis- 
take or  fraud,  such  as  would  avoid  other  contracts.  Thompson,  Neg- 
ligence, vol.  1,  §  182. 

In  Hartford  Ins.  Co.  v.  Chicago,  etc.,  Ry.  Co.,  175  U.  S.  91,  98, 
20  Sup.  Ct.  33,  36,  44  L.  Ed.  84,  Mr.  Justice  Gray,  after  stating  the 
rule  applicable  to  public  carriers,  said :  "The  plaintiff  further  insisted 
that  the  same  rules  apply  universally  and  should  be  held  to  defeat  all 
contracts  by  which  a  party  undertakes  to  put  another  at  the  mercy 
of  his  own  faulty  conduct.  But  the  only  authority  cited  which  sup- 
ports this  proposition  is  a  general  statement  in  Cooley  on  Torts,  387, 
and  an  obiter  dictum  in  Johnson's  Adm'x  v.  Richmond,  etc.,  Ry.  Co., 
86  Va.  975-978,  11  S.  E.  829,  and  it  is  certainly  too  sweeping.  Even 
a  common  carrier  niay  obtain  insurance  against  losses  occasioned  by 
the  negligence  of  himself  or  his  servants,  or  may  by  stipulation  with 
the  owner  of  the  goods  carried  have  the  benefit  of  such  insurance 
procured  thereon  by  such  owner."  Mpls.,  etc.,  Ry.  Co.  v.  Insurance 
Co.  64  Minn.  61,  69,  66  N.  W.  132;  Phoenix  Ins.  Co.  v.  Erie  Trans- 
portation Co.,  117  U.  S.  312,  6  Sup.  Ct.  1176,  29  L.  Ed.  873;  Cal- 
ifornia Ins.  Co.  v.  Union  Compress  Co.,  133  U.  S.  387,  10  Sup.  Ct. 
365,  33  L.  Ed.  730;  Wager  v.  Providence  Ins.  Co.,  150  U.  S.  99, 
14  Sup.  Ct.  55,  37  L.  Ed.  1013. 

The  right  to  insure  against  loss  by  fire  occasioned  by  the  negligence 
of  the  insured  is  no  longer  questioned.  Liverpool  &  Great  Western 
Steam  Co.  v.  Phoenix  Ins.  Co.,  129  U.  S.  438,  9  Sup.  Ct.  469,  32 
L.  Ed.  788;  Kerr,  Ins.  p.  375.  A  stronger  illustration  is  found  in 
the  recognized  business  of  insuring  employers  of  labor  against, dam- 
ages r:sulting  from  personal  injuries  occasioned  by  the  negligence  of 
the  insured. 


288  LEGALITY  OP  OBJECT 

Exceptions  to  the  general  rule  which  protects  the  freedom  of  con- 
tract are  made  in  some  instances,  especially  such  as  involve  the  re- 
lation of  master  and  servant  and  the  transactions  of  railway  compa- 
nies when  acting  as  public  carriers  of  persons  and  property.  Positive 
and  peremptory  duties  are  imposed  upon  public  carriers.  Public  pol- 
icy requires  that  contracts  which  relieve  from  these  absolute  duties 
shall  be  held  null  and  void.  The  law  imposes  upon  a  railway  com- 
pany the  absolute  duty  to  operate  its  railways,  to  employ  suitable 
men  to  operate  them,  and  to  exercise  ordinary  care  to  furnish  them 
a  reasonably  safe  place  to  work  and  with  reasonably  safe  machinery 
and  appliances  with  which  to  perform  their  work.  The  obligation 
is  imposed  by  law,  and  does  not  arise  out  of  contract.  Any  breach 
of  this  duty,  therefore,  is  a  violation  of  the  law  which  imposes  the 
duty. 

It  follows  that  a  contract  which  exempts  the  carrier  from  damages 
resulting  from  negligence  in  the  discharge  of  these  duties  is  void,  be- 
cause it  relieves  it  of  an  absolute  duty  which  the  law  imposes  upon 
it,  and  because  it  unreasonably  endangers  the  lives  of  employes  and 
passengers.  The  parties  to  such  contracts  do  not  standi  upon  an  equal 
footing.  The  law  imposes  upon  the  company  the  absolute  duty  to 
accept  passengers  and  freight  when  offered,  and  to  carry  the  former 
with  the  utmost  and  the  latter  with  ordinary  care.  The  traveler  is 
often  obliged  to  travel  and  the 'shipper  to  send  his  goods  by  railway. 
A  person  cannot  stop  to  settle  the  terms  and  to  negotiate  a  contract 
every  time  he  desires  to  use  a  railway.  On  the  other  hand,  a  rail- 
road, with  its  trained  employes  and  monopoly  of  transportation  facili- 
ties, has  the  power  to  exact  any  contract  it  desires.  This  inequality 
in  the  situation  of  the  parties  would,  if  permitted,  enable  the  company 
to  obtain  unfair  contracts,  and  the  fact  that  a  contract  which  exempts 
the  company  from  liability  for  negligence  relieves  it  from  an  absolute 
duty  imposed  by  law  and  increases  the  danger  to  the  lives  and  prop- 
erty of  the  people  constitutes  the  reason  for  the  rule  that  such  con- 
tracts are  against  public  policy.  Hartford  Fire  Ins.  Co.  v.  Chicago, 
etc.,  Ry.  Co.,  70  Fed.  201,  17  C.  C.  A.  62,  30  L.  R.  A.  193. 

Entirely  different  conditions  are  presented  by  the  case  at  bar.  In 
making  the  lease  in  question  the  railway  company  was  dealing  with 
individuals  in  reference  to  the  use  of  its  property  only  remotely,  if 
at  all,  connected  with  its  business  as  a  common  carrier.  No  law 
imposed  upon  it  the  duty  of  leasing  a  portion  of  its  right  of  way  to 
the  appellants.  A  railway  holds  its  station  grounds  and  right  of  way 
for  the  public  use  for  which  the  company  was  incorporated,  "yet  it 
is  its  private  property,  and  to  be  occupied  by  itself  and  by  others  in 
the  manner  which  it  may  consider  best  fitted  to  promote  or  not  to 
interfere  with'  the  public  use.  It  may  in  its  discretion  permit  them  to 
be  occupied  by  others  with  structures  convenient  for  the  receiving 
and  delivering  of  its  freights  upon  its  railroads,  so  long  as  a  free 
and  safe  passage  is  left  for  the  carriage  of  passengers  and  freight." 


AGEEEMENTS   CONTEAEY   TO   PUBLIC   POLICY  289 

Hartford  Ins.  Co.  v.  Chicago,  etc.,  Ry.  Co.,  175  U.  S.  92,  99,  20 
Sup.  Ct.  36,  44  L.  Ed  84;  Grand  Trunk  Ry.  Co.  v.  Richardson,  91 
U.  S.  454,  23  L.  Ed.  356;  Osgood  v.  Central  Vermont  Ry.  Co.,  17 
Vt.  334,  60  Atl.  137,  70  L.  R.  A.  930. 

The  laws  of  this  state  authorized  the  condemnation  of  a  part  of 
the  right  of  way  of  a  railway  company  for  the  erection  of  a  public 
warehouse  and  elevator.  Chapter  64,  p.  177,  Gen.  Laws  1893;  Gen. 
St.  1894,  §§  7724-7732;  Rev.  Laws  1905,  •§§  2106-2113.  But  the 
appellant  did  not  resort  to  this  procedure,  which  would  have  made  its 
elevator  a  public  enterprise  and  thus  subject  to  public  regulation. 
Stewart  v.  N.  P.  Ry.  Co.,  65  Minn.  515,  68  N.  W.  208,  33  L.  R. 
A.  427.  It  chose  rather  to  enter  into  a  private  contract  with  the  rail- 
way company  and  to  release  it  from  liability  for  damages  occasioned 
by  fire  which  might  escape  from  its  engines.  For  this  waiver  of  the 
right  of  action  it  must  have  received  some  benefit,  which  it  deemed 
the  equivalent  of  the  right  of  action  which  it  waived.  The  company 
was  under  no  legal  obligation  to  make  the  lease.  It  might  leave  the 
appellant  to  its  right  to  proceed  under  the  statute  and  accept  the  ob- 
ligations arising  out  of  the  relation  thus  created.  The  company  would 
not  be  liable  for  damages  to  property  placed  upon  its  right  of  way  by 
strangers  without  its  permission,  caused  by  fires  occasioned  by  its 
want  of  ordinary  care.  Having  the  right  to  refuse  to  make  the  con- 
tract, it  might  stipulate  for  exemption  from  damages  caused  by  its 
negligence  in  setting  fire  to  the  property  which  the  lessee  placed  upon 
the  leased  premises. 

Placing  the  building  upon  the  right  of  way  was  an  inconvenience  to 
the  railway  company  and  increased  the  danger  of  fire  to  its  own  prop- 
erty. In  the  absence  of  the  stipulation  in  question,  the  risks  and  lia- 
bilities of  the  company  would  have  been  materially  increased.  As  the 
contract  in  no  way  relieves  the  railway  company  from  the  discharge 
of  any  absolute  duty  which  it  owes  to  the  public  or  to  any  citizen, 
it  is  not  against  public  policy,  and  is  therefore  binding  upon  the 
parties.  The  authorities,  without  exception,  sustain  this  view,  El- 
liott on  Railroads,  vol,  3,  §  1236 ;  Griswold  v.  111.  Cent.  Ry.  Co.,  90 
Iowa,  265,  57  N.  W.  843,  24  L.  R.  A,  647;  Stephens  v.  Southern 
Pac.  Ry,  Co,,  109  Cal.  86,  41  Pac.  783,  29  L.  R.  A.  751,  50  Am,  St. 
Rep,  17;  King  v.  Southern  Pac.  Ry.  Co,,  109  Cal.  96,  41  Pac,  786. 
29  L.  R.  A.  755 ;  Kan.  City,  etc.,  Ry.  Co.  v.  Blaker,  68  Kan.  244, 
75  Pac.  71,  64  L.  R.  A.  81,  1  Ann.  Cas.  883;  Greenwich  Ins.  Co,  v, 
Louisville,  etc.,  Ry.  Co.,  112  Ky,  598,  66  S,  W,  411,  67  S.  W.  16, 
56  L.  R,  A,  477,  99  Am.  St,  Rep.  313 ;  Wabash  Ry,  Co,  v,  Ordelheide, 
172  Mo,  436,  72  S.  W.  684;  HartfordJ  Fire  Ins,  Co.  v,  Chicago,  etc, 
Ry,  Co.,  70  Fed.  201,  17  C.  C.  A.  62,  30  L.  R.  A.  193,  same  case  on 
appeal  175  U.  S.  91,  20  Sup.  Ct,  33,  44  L.  Ed.  84;  Baltimore,  etc.. 
Ry.  Co.  V.  Voigt,  176  U.  S.  498,  20  Sup.  Ct,  385.  44  L.  Ed,  560; 
Osgood  V,  Cent,  Vt.  Ry.  Co.,  '77  Vt.  334,  60  Atl.  137,  70  L.  R.  A. 

TUBOCKM.CONT, — 19 


290  LEGALITY  OF  OBJECT 

930;  Richmond  v.  New  York,  etc.,  Ry.  Co.,  26  R.  I.  225,  58  Atl. 
767;  Woodward  v.  Ft.  Worth,  etc.,  Ry.  Co.,  35  Tex.  Civ.  App.  14, 
79  S.  W.  896:  Mann  v.  Fere  Marquette  Ry.  Co.,  135  Mich.  210,  97 
N.  W.  721.  Cf.  Quimby  v.  Boston  &  Ale.  Ry.  Co.,  150  Mass.  365, 
23  N.  E.  205,  5  L.  R.  A.  846;  Russell  v.  Pittsburg,  etc.,  Ry.  Co.,  157 
[nd.  305,  61  N.  E.  678,  55  L.  R.  A.  253,  87  Am.  St.  Rep.  214;  Tex. 
&  Pac.  Ry.  Co.  v.  Watson,  190  U.  S.  287,  293,  23  Sup.  Ct.  681,  47 
L.  Ed.  1057. 
The  order  appealed  from  is  affirmed. 


III.  Effect  of  Illegality  »• 
1.  Agreements  Partly  Illegai, 


BISHOP  V.  PALMER  et  al. 

(Supreme  Judicial  Court  of  Massachusetts,  1888.    146  Mass.  469,  16  N.  E.  209, 

4  Am.  St.  Rep.  339.) 

Action  of  contract  by  Robert  Bishop  against  Elisha  L.  Palmer  et 
al.  The  plaintiff's  declaration  was  as  follows :  "And  the  plaintiff 
says  that  heretofore,  to-wit,  on  March  16,  1886,  the  defendants  made 
with  the  plaintiff  the  written  contract  of  which  a  copy  is  hereto  an- 
nexed; that  by  the  terms  of  said  contract,  and  for  the  considerations 
therein  alleged,  the  defendants,  among  other  things,  promised  to  pay 
to  the  plaintiff  the  sum  of  $5,000  in  ten  equal  monthly  installments, 
on  the  first  day  of  each  month,  thereafter,  until  all  were  paid;  that 
the  plaintiff  has  done  and  performed  all  things  necessary,  by  the 
terms  of  said  contract,  to  entitle  him  to  receive  the  sum  of  $5,000, 
but  that  the  defendants  have  not  performed  their  said  promise,  and 
have  failed  and  neglected  to  pay  to  the  plaintiff  the  respective  sums 
of  $500  due  on  the  first  days  of  the  months  of  July,  August,  Septem- 
ber, October,  and  November,  as  aforesaid;  wherefore  the  plaintiff 
says  that  the  defendants  owe  him  the  sum  of  $2,500."  The  second 
count  was  for  $2,500  upon  an  account  annexed,  the  cause  of  action 
being  the  same  as  in  the  first  count.  To  the  declaration  the  defend- 
ants filed  a  demurrer. 

The  contract  was,  in  substance,  as  follows:  "This  agreement,  made 
this  sixteenth  day  of  March,  A.  D.  1886,  by  and  between  Robert 
Bishop  of  Boston,  party  of  the  first  part,  and  Elisha  L.  Palmer,  Frank 

10  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  176, 
179-181,  183,  184. 


EFFECT   or  ILLEGALITY  291 

L.  Palmer,  Edward  A.  Palmer,  and  George  S.  Palmer,  copartners, 
*  *  *  parties  of  the  second  part,  and  the  Massasoit  Manufacturing 
Company,  a  corporation,  *  *  *  party  of  the  third  part,  witness- 
eth,  that,  whereas,  said  party  of  the  first  part  is  engaged  in  the  busi- 
ness of  manufacturing  and  selling  bed-quilts  and  comfortables,  to- 
gether with  all  his  plant,  machinery,  and  stocks,  manufactured  and 
unmanufactured,  now  on  hand,  and  of  wholly  giving  up  and  going  out 
of  said  business  for  the  next  five  years,  and  is  also  desirous  of  selling 
that  part  of  his  cotton-waste  business  which  is  done  or  transacted  in 
whole  or  in  part  in  the  city  of  Fall  River,  *  *  *  and  with  any 
and  all  of  the  mills  doing  business  in  said  city :  Now,  therefore,  in 
consideration  of  the  premises,  and  of  the  sum  of  $5,000,  to  be  paid  by 
the  parties  of  the  second  and  third  parts,  in  the  manner  and  times 
hereafter  specified,  the  party  of  the  first  part  hereby  sells,  assigns, 
transfers,  and  delivers  unto  the  parties  of  the  second  part  his  entire 
business,  plant,  and  enterprise  as  a  manufacturer  of,  and  dealer  in 
bed-quilts  and  comfortables,  together  with  the  good-will  of  said  busi- 
ness, and  all  and  singular,  the  machinery,  etc.,  used  by  him  in  said 
business,  and  constituting  said  manufacturer's  plant,  as  follows,  to- 
wit :  [Then  follows  an  itemized  list  of  the  machinery,  etc.,  to  be  trans- 
ferred and  provisions  for  the  delivery  of  the  same.]  And,  for  the 
consideration  named,  the  party  of  the  first  part  hereby  sells,  assigns, 
transfers,  and  conveys  to  the  party  of  the  third  part  all  that  portion 
of  his  waste  business  which  is  transacted  or  done  in  the  city  of  Fall 
River  *  *  *  with  any  and  all  corporations  doing  business  in  said 
city;  and  he  hereby  assigns  and  transfers  to  said  party  of  the  third 
part  all  his  existing  contracts,  whether  verbal  or  written,  with  any  of 
such  corporations,  or  with  firms  or  persons,  and  all  rights  thereunder, 
including  rights  of  renewal,  and  also  the  good  will  of  his  said  business 
and  trade  with  the  corporations  in  said  city  of  Fall  River.  This  clause 
does  not  have  any  reference  to  buying  and  selling  from  individuals,  it 
being  the  intention  of  said  party  of  the  first  part  absolutely  and  com- 
pletely to  sell  and  transfer  to  said  party  of  the  third  part  his  entire 
cotton-waste  business,  trade,  and  dealings,  and  the  exclusive  right  to 
deal  and  do  a  cotton-waste  business  with,  and  purchase  cotton  waste 
of,  any  and  all  of  said  corporations,  for  the  period  of  five  years  from 
the  date  hereof.  And  said  party  of  the  first  part  hereby,  for  himself, 
his  executors,  and  assigns,  covenants  and  agrees  with  sJiid  parties  of 
the  second  and  third  parts,  and  each  of  them,  and  their  executors, 
administrators,  successors,  and  assigns,  respectively,  that,  for  and  dur- 
ing the  period  of  five  years  from  the  date  hereof,  he  will  not,  either 
directly  or  indirectly,  in  his  own  name,  or  in  the  name  of  any  other 
person  or  persons,  continue  in,  carry  on,  or  engage  in  the  business  of 
manufacturing,  or  dealing  in,  bed-quills  or  comfortables,  or  of  any 
business  of  which  that  may  form  any  part.  And  he  further  covenants 
and  agrees,  as  aforesaid,  that,  for  and  during  said  period,  he  will  not 
enter  into  the  cotton-waste  business  in  said  city  of  Fall   River  with 


292  LEGALITY  OF   OBJECT 

any  corporation,  firm,  or  person  located  and  doing  business  in  said 
city;  and  especially  that  he  will  not,  directly  or  indirectly,  in  his  own 
name,  or  in  the  name  of  any  other  person,  buy,  or  influence  or  pro- 
cure other  persons  to  buy,  any  cotton  waste  from  said  mills,  in  said 
city  of  Fall  River,  or  belonging  to  or  controlled  by  any  corporation 
located  in  said  city,  and  that  he  will  not,  either  directly  or  indirectly, 
make  any  bid  therefor,  or  influence  any  other  person  so  to  do,  in  con- 
nection with  the  waste  business  in  said  city,  or  the  purchase  of  waste 
from  such  parties." 

The  party  then  further  agreed  not  to  buy,  or  offer  to  buy,  any  waste 
produced  by  certain  specified  corporations  in  Fall  River;  and  the 
contract  then  provided  that  the  payment  of  the  consideration  should 
be  in  installments  payable  as  set  forth  in  plaintiff's  declaration. 

The  superior  court  sustained  defendants'  demurrer,  and  the  plain- 
tiff appealed  to  the  supreme  judicial  court. 

C.  Alle:n,  J.  The  defendants'  promise  which  is  declared  on  was 
made  in  consideration  of  the  sale  and  delivery  of  the  business,  plant, 
property,  and  contracts  of  the  plaintiff,  and  the  faithful  performance 
of  the  covenants  and  agreements  contained  in  the  written  instrument 
signed  by  the  parties.  The  parties  made  no  apportionment  or  separate 
valuation  of  the  different  elements  of  the  consideration.  The  business, 
plant,  property,  contracts,  and  covenants  were  all  combined  as  form- 
ing one  entire  consideration.  There  is  no  way  of  ascertaining  what 
valuation  was  put  by  the  parties  upon  either  portion  of  it.  There  is 
no  suggestion  that  there  was  any  such  separate  valuation,  and  any 
estimate  which  might  now  be  put  upon  any  item  would  not  be  the  es- 
timate of  the  parties.  It  is  contended  by  the  defendants  that  each 
one  of  the  three  particular  covenants  and  agreements  into  which  the 
plaintiff  entered  is  illegal  and  void,  as  being  in  restraint  of  trade.  It 
is  sufficient  for  us  to  say  that  the  first  of  them  is  clearly  so,  it  being 
a  general  agreement,  without  any  limitation  of  space,  that,  for  and 
during  the  period  of  five  years,  he  will  not,  either  directly  or  indirectly, 
continue  in,  carry  on,  or  engage  in,  the  business  of  manufacturing  or 
dealing  in  bed-quilts  or  comfortables,  or  of  any  business  of  which  that 
may  form  any  part.  Thus  much  is  virtually  conceded  by  the  plaintiff, 
and  so  are  the  authorities.  Taylor  v.  Blanchard,  13  Allen,  370,  90 
Am.  Dec.  203;  Dean  v.  Emerson,  102  Mass.  480;  Machine  Co.  v. 
Morse,  103  Mass.  73,  4  Am.  Rep.  513;  Alger  v.  Thacher,  19  Pick. 
51,  31  Am.  Dec.  119;  Navigation  Co.  v.  Winsor,  20  Wall.  64,  22  L. 
Ed.  315;  Davies  v.  Davies,  36  Ch.  Div.  359;  2  Kent,  Comm.  467, 
note;   Mete.  Cont.  232. 

Two  principal  grounds  on  which  such  contracts  are  held  to  be  void 
are  that  they  tend  to  deprive  the  public  of  the  services  of  men  in  the 
employments  and  capacities  in  which  they  may  be  most  useful,  and 
that  they  expose  the  public  to  the  evils  of  monopoly.  Alger  v.  Thach- 
er, ubi  supra.  The  question  then  arises  whether  an  action  can  be  sup- 
ported upon  the  promise  of  the  defendants  founded  upon  such  a  con- 


ErrECT  OF  ILLEGALITY  293 

sideration  as  that  which  has  been  described.  As  a  general  rule,  where 
a  promise  is  made  for  one  entire  consideration  a  part  of  which  is 
fraudulent,  immoral,  or  unlawful,  and  there  has  been  no  apportion- 
ment made,  or  means  of  apportionment  furnished,  by  the  parties  them- 
selves, it  is  well  settled  that  no  action  will  lie  upon  the  promise.  If 
the  bad  part  of  the  consideration  is  not  severable  from  the  good,  the 
whole  promise  fails.  Robinson  v.  Green,  3  Mete.  161 ;  Rand  v. 
Mather,  11  Cush.  1,  59  Am.  Dec.  131;  Woodruff  v.  Wentworth,  133 
Mass.  309,  314;  Bliss  v.  Negus,  8  Mass.  51;  Clark  v.  Ricker,  14  N. 
H.  44;  Woodruff  v.  Hinman,  11  Vt.  592,  34  Am.  Dec.  712;  Pick- 
ering V.  Railway  Co.,  L.  R.  3  C.  P.  250;  Harrington  v.  Dock  Co.,  3 
Q.  B.  Div.  549;  2  Chit.  Cont.  (11th  Amer.  Ed.)  972;  Leake,  Cont. 
779,  780;   Pol.  Cont.  321;   Mete.  Cont.  247. 

It  is  urged  that  this  rule  does  not  apply  to  a  stipulation  of  this 
character  which  violates  no  penal  statute,  which  contains  nothing 
malum  in  se,  and  which  is  simply  a  promise  enforceable  at  law.  But 
a  contract  in  restraint  of  trade  is  held  to  be  void  because  it  tends  to 
the  prejudice  of  the  public.  It  is  therefore  deemed  by  the  law  to  be 
not  merely  an  insufficient  or  invalid  consideration,  but  a  vicious  one. 
Being  so,  it  rests  on  the  same  ground  as  if  such  contracts  were  forbid- 
den by  positive  statutes.  They  are  forbidden  by  the  common  law,  and 
are  held  to  be  illegal.  2  Kent,  Comm.  466;  Mete.  Cont.  221 ;  2  Chit. 
Cont.  974;  White  v.  Buss,  3  Cush.  449,  450;  Hynds  v.  Hays,  25  Ind. 
31,  36. 

It  is  contended  that  the  defendants,  by  being  unable  to  enforce  the 
stipulation  in  question,  only  lose  what  they  knew,  or  were  bound  to 
know,  was  legally  null ;  that  they  have  all  that  they  suppose  they 
were  getting,  namely,  a  promise  which  might  be  kept,  though  incapable 
of  legal  enforcement;  and  that  if  they  were  content  to  accept  such 
promise,  and  if  there  is  another  good  and  sufficient  consideration,  they 
may  be  held  upon  their  promise.  But  this  agreement  cannot  properly 
extend  to  a  case  where  a  part  of  an  entire  and  inseparable  considera- 
tion is  positively  vicious,  however  it  might  be  where  it  was  simply  in- 
valid, as  in  Parish  v.  Stone,  14  Pick.  198,  25  Am.  Dec.  378.  The 
law  visits  a  contract  founded  on  such  a  consideration  with  a  positive 
condemnation,  which  it  makes  effectual  by  refusing  to  support  it,  in 
whole  or  in  part,  where  the  consideration  cannot  be  severed.  The 
fact  that  the  plaintiff  had  not  failed  to  perform  his  part  of  the  con- 
tract, does  not  enable  him  to  maintain  his  action.  An  illegal  consider- 
ation may  be  actual,  and  substantial,  and  valuable,  but  it  is  not,  in  law, 
sufficient. 

The  plaintiff  further  suggests  that,  if  the  defendants  were  to  sue 
him  on  this  contract,  they  could  clearly,  so  far  as  the  question  of  le- 
gality is  concerned,  maintain  an  action  upon  all  its  parts,  except,  pos- 
sibly, the  single  covenant  in  question.  Mallan  v.  May,  11  Mees.  &  W. 
653;  Green  v.  Price,  13  Mees.  &  W.  695,  16  Mces.  &  W.  346.  This 
may  be  so.    If  they  pay  to  the  plaintiff  the  whole  sum  called  for  by  the 


294  LEGALITY  OF  OBJECT 

terms  of  the  contract,  it  may  well  be  that  they  can  call  on  him  to 
perform  all  of  his  agreement,  except  such  as  are  unlawful.  In  such 
case,  they  would  merely  waive  or  forego  a  part  of  what  they  were  to 
receive,  and  recover  or  enforce  the  rest.  It  does  not,  however,  follow 
from  this  that  they  can  be  compelled  to  pay  the  sum  promised  by 
them,  when  a  part  of  the  consideration  of  such  promise  was  illegal. 
They  are  at  liberty  to  repudiate  the  contract  on  this  ground,  and,  hav- 
ing done  so,  the  present  action  founded  on  the  contract  cannot  be 
maintained ;  and  it  is  not  now  to  be  determined  what  other  liability  the 
defendants  may  be  under  to  the  plaintiff,  by  reason  of  what  they  may 
have  received  under  the  contract.    Judgment  affirmed. 


2.  Object  Innocent,  but  Intention  Unlaweui, 
(A)  Sale 


GRAVES  et  al.  v.  JOHNSON. 

(Supreme  Judicial  Court  of  Massachusetts,   1892.     156  Mass.  211,  30  N.  EL 
SIS,  lo   L.  R.  A.  S34,  32   Am.   St.  Rep.  446.) 

Action  by  Chester  H.  Graves  and  others  against  Walter  B.  John- 
son for  the  price  of  liquors  sold  to  defendant  by  plaintiffs.  Judgment 
for  plaintiffs,  and  defendant  excepts. 

Holmes,  J.  This  is  an  action  for  the  price  of  intoxicating  liquors. 
It  is  found  that  they  were  sold  and  delivered  in  Massachusetts  by  the 
plaintiffs  to  the  defendant,  a  Maine  hotel  keeper,  with  a  view  to  their 
being  resold  by  the  defendant  in  Maine  against  the  laws  of  that  state. 
These  are  all  the  material  facts  reported,  but  these  findings  we  must 
assume  were  warranted,  as  the  evidence  is  not  reported,  so  that  no 
question  of  the  power  of  Maine  to  prohibit  the  sales  is  open.  The 
only  question  is  whether  the  facts  as  stated  show  a  bar  to  this  action. 

The  question  is  to  be  decided  on  principles  which  we  presume  would 
prevail  generally  in  the  administration  of  the  common  law  in  this 
country.  Not  only  should  it  be  decided  in  the  same  way  in  which  we 
should  expect  a  Maine  court  to  decide  upon  a  Maine  contract  pre- 
senting a  similar  question,  but  it  should  be  decided  as  we  think  that 
a  Maine  court  ought  to  decide  this  very  case  if  the  action  were  brought 
there.  It  is  noticeable,  and  it  has  been  observed  by  Mr.  Pollock,  that 
some  of  the  English  cases  which  have  gone  furthest  in  asserting  the 
right  to  disregard  the  revenue  laws  of  a  country  other  than  that 
where  the  contract  is  made  and  is  to  be  performed,  have  had  refer- 
ence to  the  English  revenue  laws.  Holman  v.  Johnson,  1  Cowp.  341 ; 
Poll.  Cont.  (5th  Ed.)  308.    See,  also,  Mclntyre  v.  Parks,  3  Mete.  207. 


EFFECT   OF   ILLEGALITY  295 

The  assertion  of  that  right,  however,  no  doubt  was  in  the  interest  of 
English  commerce,  (Pellecat  v.  Angell,  2  Cromp.  M.  &  R.  311,  313,) 
and  has  not  escaped  criticism,  (Story,  Confl.  Laws,  §§  254,  257,  note ; 
3  Kent,  Comm.  265,  266;  Whart.  Confl.  Laws,  §  484,)  although  there 
may  be  a  question  how  far  the  actual  decisions  go  beyond  what  would 
have  been  held  in  the  case  of  an  English  contract  affecting  only  Eng- 
lish laws.  See  Hodgson  v.  Temple,  5  Taunt,  181 ;  Brown  v.  Duncan, 
10  Barn.  &  C.  93,  95,  98;  Harris  v.  Runnels,  12  How.  79,  83,  84,  13 
L.  Ed.  901. 

Of  course,  it  would  be  possible  for  an  independent  state  to  enforce 
all  contracts  made  and  to  be  performed  within  it  without  regard  to 
how  much  they  might  contravene  the  policy  of  its  neighbors'  laws. 
But  in  fact  no  state  pursues  such  a  course  of  barbarous  isolation.  As 
a  general  proposition,  it  is  admitted  that  an  agreement  to  break  the 
laws  of  a  foreign  country  would  be  invalid.  Poll.  Cont.  (5th  Ed  ) 
308.  The  courts  are  agreed  on  the  invalidity  of  a  sale  when  the  con- 
tract contemplates  a  design  on  the  part  of  the  purchaser  to  resell  con- 
trary to  the  laws  of  a  neighboring  state,  and  requires  an  act  oi)  the  part 
of  the  seller  in  furtherance  of  the  scheme.  Waymell  v.  Reed,  5  Term 
R.  599;  Gaylord  v.  Soragen,  32  Vt.  110,  76  Am.  Dec.  154;  Fisher  v. 
Lord,  63  N.  H.  514,  3  Atl.  927;  Hull  v.  Ruggles,  56  N.  Y.  424,  429. 

On  the  other  hand,  plainly  it  would  not  be  enough  to  prevent  a  re- 
covery of  the  price  that  the  seller  had  reason  to  believe  that  the  buyer 
intended  to  resell  the  goods  in  violation  of  law.  He  must  have  known 
the  intention  in  fact.  Finch  v.  Mansfield,  97  Mass.  89,  92;  Adams  v. 
Coulliard,  102  Mass.  167,  173.  As  in  the  case  of  torts,  a  man  has  a 
right  to  expect  lawful  conduct  from  others.  In  order  to  charge  him 
with  the  consequences  of  the  act  of  an  intervening  wrongdoer,  you 
must  show  that  he  actually  contemplated  the  act.  Hayes  v.  Hyde 
Park,  153  Mass,  514-516,  27  N.  E.  522,  12  L.  R.  A.  249. 

Between  these  two  extremes  a  line  is  to  be  drawn.  But  as  the  point 
where  it  should  fall  is  to  be  determined  by  the  intimacy  of  the  con- 
nection between  the  bargain  and  the  breach  of  the  law  in  the  partic- 
ular case,  the  bargain  having  no  general  and  necessary  tendency  to 
induce  such  a  breach,  it  is  not  surprising  that  courts  should  have 
drawn  the  line  in  slightly  different  places.  It  has  been  thought  not 
enough  to  invalidate  a  sale  that  the  seller  merely  knows  that  the  buyer 
intends  to  resell  in  violation  even  of  the  domestic  law.  Tracy  v. 
Talmage,  14  N.  Y.  162,  67  Am.  Dec.  132;  Hodgson  v.  Temple,  5 
Taunt.  181,  So  of  the  law  of  another  state.  Mclntyre  v.  Parks,  3 
Mete,  207;  Sortwell  v.  Hughes,  1  Curt.  244,  Fed.  Cas.  No.  13,177; 
Green  v.  Collins,  3  Cliff.  494,  Fed.  Cas.  No.  5,755;  Hill  v.  Spear,  50 
N.  H.  253,  9  Am.  Rep.  205.  Dater  v.  Earl,  3  Gray,  482,  is  a  decision 
on  New  York  law. 

But  there  are  strong  intimations  in  the  later  Massachusetts  cases 
that  the  law  on  the  last  point  is  the  other  way,  (Suit  v.  Woodhall,  113 
Mass,  391,  395;  Finch  v.  Mansfield,  97  Mass.  89,  92;)    and  the  Eng- 


296  LEGALITY  OF  OBJECT 

lish  decisions  have  gone  great  lengths  in  the  case  of  knowledge  of  in- 
tent to  break  the  domestic  law,  (Pearce  v.  Brooks,  L.  R.  1  Exch.  213; 
Taylor  v.  Chester,  L.  R.  4  Q.  B.  309,  311.) 

However  this  may  be,  it  is  decided  that  when  a  sale  of  intoxicating 
liquor  in  another  state  has  just  so  much  greater  proximity  to  a  breach 
of  the  Massachusetts  law  as  is  implied  in  the  statement  that  it  was 
made  with  a  view  to  such  a  breach,  it  is  void.  Webster  v.  Hunger, 
8  Gray,  584;  Orcutt  v.  Nelson,  1  Gray,  536,  541;  Hubbell  v.  Flint,  13 
Gray,  277,  279;  Adams  v.  Coulliard,  102  Mass.  167,  172,  173.  Even 
in  Green  v.  Collins  and  Hill  v.  Spear,  the  decision  in  Webster  v.  Mun- 
ger  seems  to  be  approved.  See,  also,  Langton  v.  Hughes,  1  Maule  & 
S.  593 ;  M'Kinnell  v.  Robinson,  3  Mees.  &  W.  434,  441 ;  White  v. 
Buss,  3  Cush.  448.  If  the  sale  would  not  have  been  made  but  for  the 
seller's  desire  to  induce  an  unlawful  sale  in  Maine,  it  would  be  an 
unlawful  sale,  on  the  principles  explained  in  Hayes  v.  Hyde  Park, 
153  Mass.  514,  27  N.  E.  522,  yi  L.  R.  A.  249,  and  Tasker  v.  Stanley, 
153  Mass.  148,  26  N.  E.  417,  10  L.  R.  A.  468.  The  overt  act  of  selling, 
which  otherwise  would  be  too  remote  from  the  apprehended  result, — 
an  unlawful  sale  by  some  one  else, — would  be  connected  with  it,  and 
taken  out  of  the  protection  of  the  law  by  the  fact  that  that  result 
was  actually  intended. 

We  do  not  understand  the  judge  to  have  gone  so  far  as  we  have 
just  supposed.  We  assume  that  the  sale  would  have  taken  place  what- 
ever the  buyer  had  been  expected  to  do  with  the  goods.  But  we  un- 
derstand the  judge  to  have  found  that  the  seller  expected  and  desired 
the  buyer  to  sell  unlawfully  in  Maine,  and  intended  to  facilitate  his 
doing  so,  and  that  he  was  known  by  the  buyer  to  have  that  intent. 
The  question  is  whether  the  sale  is  saved  by  the  fact  that  the  intent 
mentioned  was  not  the  controlling  inducement  to  it.  As  the  connec- 
tion between  the  act  in  question,  the  sale  here,  and  the  illegal  result, 
the  sale  in  Maine, — its  tendency  to  produce  it, — is  only  through  the 
later  action  of  another  man,  the  degree  of  connection  or  tendency  may 
vary  by  delicate  shades.  If  the  buyer  knows  that  the  sale  is  made  on-ly 
for  the  purpose  of  facilitating  his  illegal  conduct,  the  connection  is  at 
the  strongest.  If  the  sale  is  made  with  the  desire  to  help  him  to  his 
end,  although  primarily  made  for  money,  the  seller  cannot  complain 
if  the  illegal  consequence  is  attributed  to  him.  If  the  buyer  knows 
that  the  seller,  while  aware  of  his  intent,  is  indifferent  to  it  or  disap- 
proves of  it,  it  may  be  doubtful  whether  the  connection  is  sufficient. 
Compare  Com.  v.  Churchill,  136  Mass.  148,  150.  It  appears  to  us  not 
unreasonable  to  draw  the  line  as  it  was  drawn  in  Webster  v.  Munger, 
and  to  say  that  when  the  illegal  intent  of  the  buyer  is  not  only  known 
to  the  seller,  but  encouraged  by  the  sale  as  just  explained,  the  sale 
is  void.  The  accomplice  is  none  the  less  an  accomplice  that  he  is 
paid  for  his  act.     See  Com.  v.  Harrington,  3  Pick.  26. 

The  ground  of  the  decision  in  Webster  v.  Munger  is  that  contracts 
like  the  present  are  void.     If  the  contract  had  been  valid,  it  would 


EFFECT   OF   ILLEGALITY  297 

have  been  enforced.  Dater  v.  Earl,  3  Gray,  482.  As  we  have  said  or 
implied  already,  no  distinction  can  be  admitted  based  on  the  fact  that 
the  law  to  be  violated  in  that  case  was  the  lex  fori.  For  if  such  a  dis- 
tinction is  ever  sound,  and  again  if  the  same  principles  are  not  always 
to  be  applied  whether  the  law  to  be  violated  is  that  of  the  state  of  the 
contract  or  of  another,  (see  Tracy  v.  Talmage,  14  N.  Y.  162,  213,  67 
Am.  Dec.  132,)  at  least  the  right  to  contract  with  a  view  to  a  breach 
of  the  laws  of  another  state  of  this  Union  ought  not  to  be  recog- 
nized as  against  a  statute  passed  to  carry  out  fundamental  beliefs 
about  right  and  wrong  shared  by  a  large  part  of  our  own  citizens. 
Territt  v.  Bartlett,  21  Vt.  184,  188,  189. 

In  the  opinion  of  a  majority  of  the  court,  this  case  is  governed  by 
Webster  v.  Munger,  and  we  believe  that  it  would  have  been  decided 
as  we  decide  it  if  the  action  had  been  brought  in  Maine  instead  of 
here.    Banchor  v.  Mansel,  47  Me.  58.    Exceptions  sustained. 


(B)  Loan 


TYLER  V.  CARLISLE. 

(Supreme  Judicial   Court  of  Maine,  1887.     79  Me.  210,  9  Atl.  356, 
1  Am.  St.  Rep.  301.) 

Assumpsit  to  recover  money  loaned.  The  verdict  was  for  the  de- 
fendant, and  the  plaintiff  alleged  exceptions. 

Peters,  C.  J.  The  plaintiff  claims  to  recover  a  sum  of  money 
loaned  by  him  while  the  defendant  was  engaged  in  playing  at  cards. 
The  ruling  at  the  trial  was  that,  if  the  plaintiff  lent  the  money  with 
an  express  understanding,  intention,  and  purpose  that  it  was  to  be 
used  to  gamble  with,  and  it  was  so  used,  the  debt  so  created  cannot 
be  recovered;  but  otherwise  if  the  plaintiff  had  merely  knowledge 
that  the  money  was  to  be  so  used. 

Upon  authority  and  principle  the  ruling  was  correct.  Any  dif- 
ferent doctrine  would,  in  most  instances,  be  impracticable  and  unjust. 
It  does  not  follow  that  a  lender  has  a  guilty  purpose  merely  because  he 
knows  or  believes  that  the  borrower  has.  There  may  be  a  visible  line 
between  the  motives  of  the  two.  If  it  were  not  so,  men  would  have 
great  responsibilities  for  the  motives  and  acts  of  others.  A  person  may 
loan  money,  to  his  friend, — to  the  man, — and  not  to  his  purpose.  He 
may  at  the  same  time  disapprove  his  purpose.  He  may  not  be  willing 
to  deny  his  friend,  however  much  disapproving  his  acts.  In  order  to 
find  the  lender  in  fault,  he  must  himself  have  an  intention  that  the 
money  shall  be  illegally  used.  There  must  be  a  combination  of  in- 
tention  between  lender  and   borrower, — a  union  of   purposes.     The 


298  LEGALITY  OF  OBJECT 

lender  must  in  some  manner  be  a  confederate  or  participator  in  the 
borrower's  act, — be  himself  implicated  in  it.  He  must  loan  his  money 
for  the  express  purpose  of  promoting  the  illegal  design  of  the  bor- 
rower, not  intend  merely  to  serve  or  accommodate  the  man.  In  sup- 
port of  this  view  many  cases  might  be  adduced.  A  few  prominent 
ones  will  suffice.  Green  v.  Collins,  3  Cliff.  494,  Fed.  Cas.  No.  5,755  ; 
Gaylord  v.  Soragen,  32  Vt.  110,  76  Am.  Dec.  154;  Hill  v.  Spear,  50 
N.  H.  253,  9  Am.  Rep.  205 ;  Peck  v.  Briggs,  3  Denio  (N.  Y.)  107 ; 
Mclntyre  v.  Parks,  3  Mete.  (Mass.)  207;  Banchor  v.  Mansel,  47 
Me.  58.  See  Franklin  Co.  v.  Lewiston  Sav.  Bank,  68  Me.  47,  28 
Am.  Rep.  9. 

Nor  was  the  branch  of  the  ruling  wrong  that  plaintiff,  even  though 
a  participator,  could  recover  his  money  back  if  it  had  not  been  ac- 
tually used  for  illegal  purposes.  In  minor  offenses,  the  locus  pen- 
itentise  continues  until  the  money  has  been  actually  converted  to  the 
illegal  use.  The  law  encourages  a  repudiation  of  the  illegal  contract, 
even  by  a  guilty  participator,  as  long  as  it  remains  an  executory  con- 
tract, or  the  illegal  purpose  has  not  been  put  in  operation.  The  lender 
can  cease  his  own  criminal  design,  and  reclaim  his  money.  "The 
reason  is,"  says  Wharton,  "the  plaintiff's  claim  is  not  to  enforce,  but 
to  repudiate,  an  illegal  contract."  Whart.  Cont.  §  354,  and  cases 
there  cited.  The  object  of  the  law  is  to  protect  the  public, — not  the 
parties.  "It  best  comports  with  public  policy  to  arrest  the  illegal 
transaction  before  it  is  consummated,"  says  the  court  in  Stacy  v. 
Foss,  19  Me.  335,  36  Am.  Dec.  755.  See  White  v.  Bank,  22  Pick. 
(Mass.)  181.  The  rule  allowing  a  recovery  back  does  not  apply  where 
the  lender  knows  that  some  infamous  crime  is  to  be  committed  with 
the  means  which  he  furnishes.  It  applies  only  where  the  minor  of- 
fenses are  involved.     Exceptions  overruled. 


3.  Relief  of  Party  to  Unlawful  Agreements 


WHITE   V.   PRESIDENT,   ETC.,   OF   FRANKLIN   BANK. 

(Supreme   Judicial  Court   of  Massachusetts,   1839.     22   Pick.    181.) 

By  an  agreed  statement  of  facts,  it  appeared,  that  on  the  10th  of 
February,  1837,  the  plaintiff  deposited  with  the  defendants  the  sum 
of  $2,000,  and  received  from  them  a  book  containing  the  following 
words  and  figures,  to  wit : 

"Dr.  Franklin  Bank,  in  account  with  B.  F.  White,  Cr.,  1837,  Feb. 
10th.  To  cash  deposited,  $2,000.  The  above  deposit  to  remain  until 
the  10th  day  of  August.     E.  F.  Bunnell,  Cashier." 


EFFECT   OF   ILLEGALITY  299 

It  further  appeared,  that  on  the  7th  of  July,  1837,  the  plaintiff 
brought  this  action  against  the  bank  to  recovc:  the  money  so  de- 
posited by  him,  declaring  on  the  money  counts,  and  on  an  account 
stated. 

If  the  court  should  be  of  opinion,  that  the  action  could  be  main- 
tained, the  defendants  were  to  be  defaulted  and  judgment  rendered 
for  the  sum  of  $2,000  with  interest ;  otherwise  the  plaintiff  was  to 
become  nonsuit. 

Wilde,  J.  The  first  ground  of  the  defence  is,  that  the  action  was 
prematurely  commenced.  The  entry  in  the  book  given  to  the  plaintiff' 
by  the  cashier  of  the  bank,  is  undoubtedly  good  evidence  of  a  promise 
to  pay  the  amount  of  the  deposit  on  the  10th  day  of  August ;  and 
if  this  was  a  valid  and  legal  promise  this  action  cannot  be  maintained. 
But  it  is  very  clear,  that  this  promise  or  agreement  that  the  deposit 
should  remain  in  the  bank  for  the  time  limited,  is  void  by  virtue  of 
Rev.  St.  c.  36,  §  57,  which  provides  that  no  bank  shall  make  or  issue 
any  note,  bill,  check,  draft,  acceptance,  certificate  or  contract  in  any 
form  whatever  for  the  payment  of  money,  at  any  future  day  certain, 
or  with  interest  excepting  for  money  that  may  be  borrowed  of  the 
commonwealth,  with  other  exceptions  not  material  in  the  present  case. 

The  agreement  that  the  deposit  should  remain  until  the  10th  day 
of  August  amounts  in  law,  by  the  obvious  construction  and  meaning 
of  it,  to  a  promise  to  pay  on  that  day.  This,  therefore,  was  an  il- 
legal contract  and  a  direct  contravention  of  the  statute.  Such  a 
promise  is  void ;  and  no  court  will  lend  its  aid  to  enforce  it.  This 
is  a  well-settled  principle  of  law.  It  was  fully  discussed  and  con- 
sidered in  the  case  of  Wheeler  v.  Russell,  17  Mass.  281,  and  the  late 
chief  justice,  in  delivering  the  opinion  of  the  court,  remarked,  "that 
no  principle  of  law  is  better  settled,  than  that  no  action  will  lie  upon 
a  contract  made  in  violation  of  a  statute  or  of  a  principle  of  the  com- 
mon law."  The  same  principle  is  laid  down  in  Bank  v.  Merrick,  14 
Mass.  322,  and  in  Russell  v.  De  Grand,  15  Mass.  39.  In  Belding  v. 
Pitkin,  2  Caines  (N.  Y.)  149,  Thompson,  J.,  said,  "It  is  a  first  prin- 
ciple, and  not  to  be  touched,  that  a  contract,  in  order  to  be  binding, 
must  be  lawful."  The  same  principle  is  fully  .established  by  the  Eng- 
lish authorities.  In  Shiffner  v.  Gordon,  12  East,  304,  Lord  Ellen- 
borough  laid  it  down  as  a  settled  rule,  "that  where  a  contract  which 
is  illegal  remains  to  be  executed,  the  court  will  not  assist  either  party, 
in  an  action  to  recover  for  the  non-execution  of  it." 

It  is  therefore  very  clear,  we  think,  that  no  action  can  be  main- 
tained on  the  defendants'  express  promise,  and  that,  if  the  plaintiff  be 
entitled  to  recover  in  any  form  of  action,  it  must  be  founded  on  an 
implied  promise. 

The  second  objection,  and  that  on  which  the  defendants'  counsel 
principally  rely,  proceeds  on  the  admission  that  the  contract  is  illegal ; 
and  they  insist  that  where  money  has  been  paid  by  one  of  two  parties 
to  the  other,  on  an  illegal  contract,  both  being  parlicipcs  criniinis,  no 


300  '  LEGALITY  OF  OBJECT 

action  can  be  maintained  to  recover  it  back.  The  rule  of  law  is  so 
laid  down  by  Lord  Kenyon,  in  Howson  v.  Hancock,  8  Term  R.  577, 
and  in  other  cases.  This  rule  may  be  correctly  stated  in  respect  to 
contracts  involving  any  moral  turpitude,  but  when  the  contract  is 
merely  malum  prohibitum,  the  rule  must  be  taken  with  some  qualifi- 
cations and  exceptions,  without  which  it  cannot  be  reconciled  with 
many  decided  cases. 

The  rule  as  stated  by  Comyn,  in  his  treatise  on  Contracts,  will 
reconcile  most  of  the  cases  which  are  apparently  conflicting.  "When 
money  has  been  paid  upon  an  illegal  contract,  it  is  a  general  rule  that 
if  the  contract  be  executed,  and  both  parties  are  in  pari  delicto,  nei- 
ther of  them  can  recover  from  the  other  the  money  so  paid ;  but  if 
the  contract  continues  executory,  and  the  party  paying  the  money  be 
desirous  of  rescinding  it,  he  may  do  so,  and  recover  back  his  deposit 
by  action  of  indebitatus  assumpsit  for  money  had  and  received.  And 
this  distinction  is  taken  in  the  books,  namely,  where  the  action  is  in 
affirmance  of  an  illegal  contract,  the  object  of  which  is  to  enforce  the 
performance  of  an  engagement  prohibited  by  law,  clearly  such  an  ac- 
tion can  in  no  case  be  maintained;  but  where  the  action  proceeds  in 
disaffirmance  of  such  a  contract,  and,  instead  of  endeavoring  to  en- 
force it,  presumes  it  to  be  void  and  seeks  to  prevent  the  defendant 
from  retaining  the  benefit  which  he  derived  from  an  unlawful  act, 
there  it  is  consonant  to  the  spirit  and  policy  of  the  law  that  the  plain- 
tiff should  recover."    2  Com.  Cont.  109. 

The  rule,  with  these  qualifications  and  distinctions,  is  well  support- 
ed by  the  cases  collected  in  Comyn  and  by  later  decisions.  The  ques- 
tion then  is,  whether,  in  conformity  with  these  principles,  upon  the 
facts  agreed,  this  action  can  be  maintained. 

The  first  ground  on  which  the  plaintiff's  counsel  rely  in  answer  to 
the  defendants'  objection  is,  that  there  was  no  illegality  in  making  the 
deposit,  and  that  the  illegality  of  the  transaction  is  confined  to  the 
promise  of  the  bank  and  the  security  given  for  the  repayment,  that 
alone  being  prohibited  by  the  statute. 

The  leading  case  on  this  point  is  that  of  Robinson  v.  Bland,  2  Bur- 
rows, 1077.  That  was  an  action  on  a  bill  of  exchange  given  for 
money  lent,  and  for  money  won  at  play.  By  St.  9  Anne,  c.  14,  it 
was  enacted  that  all  notes,  bills,  bonds,  judgments,  mortgages,  or  oth- 
er securities  for  money  won  or  lent  at  play  should  be  utterly  void. 
The  court  held,  that  the  plaintiff  was  not  entitled  to  recover  on  the 
bill  of  exchange,  but  that  he  might  recover  on  the  money  counts  for 
the  money  lent,  although  it  was  lent  at  the  same  time  and  place  that 
the  other  money  for  which  the  bill  was  given  was  won. 

The  same  principle  was  laid  down  in  the  cases  of  Insurance  Co.  v. 
Scott,  19  Johns.  (N.  Y.)  1 ;  Insurance  Co.  v.  Caldwell,  3  Wend.  (N. 
Y.)  296,  and  Insurance  Co.  v.  Bloodgood,  4  Wend.  (N.  Y.)  652.  In 
these  cases  the  decisions  were,  that  although  the  notes  were  illegal 
and  void  as  securities,  yet  that  the  money  lent,  for  which  the  notes 


EFFECl'   OF   ILLEGAIiITT 


301 


were  given,  might  be  recovered  back.  The  principle  of  law  estab- 
lished by  these  decisions  is  applicable  to  the  present  case._  The  only 
doubt  arises  from  the  meaning  of  the  word  "contract,"  in  the  pro- 
hibitory statute.  But  taking  that  word  in  connection  with  the  other 
words  of  prohibition,  we  think  it  equivalent  to  the  promise  of  the 
bank,  and  that  the  intention  of  the  legislature  was  ta  prohibit  the 
making  or  issuing  of  any  security  in  any  form  whatever,  for  the  pay- 
ment of  money  at  any  future  day. 

The  next  answer  to  the  objection  of  the  defendants  is,  that  although 
the  plaintiff  may  be  considered  as  being  particeps  criminis  with  the 
defendants,  they  are  not  in  pari  delicto.  It  is  not  universally  true, 
that  a  party,  who  pays  moneys  as  the  consideration  of  an  illegal  con- 
tract, cannot  recover  it  back.  Where  the  parties  are  not  in  pari  delic- 
to, the  rule  "potior  est  conditio  defendentis"  is  not  applicable.  In 
Lacaussade  v.  White,  7  Term  R.  535,  the  court  say,  "that  it  was  more 
consonant  to  the  principles  of  sound  policy  and  justice,  that  wherever 
money  has  been  paid  upon  an  illegal  consideration  it  may  be  recov- 
ered back  again  by  the  party  who  has  thus  improperly  paid  it,  than, 
by  denying  the  remedy,  to  give  effect  to  the  illegal  contract." 

This  principle,  however,  is  not  by  law  allowed  to  operate  in  favor 
of  either  party,  where  the  illegality  of  the  contract  arises  from  any 
moral  turpitude.  In  such  cases  the  court  will  not  undertake  to  ascer- 
tain the  relative  guilt  of  the  parties  or  afford  relief  to  either. 

But  where  money  is  paid  on  a  contract  which  is  merely  prohibited 
by  statute,  and  the  receiver  is  the  principal  offender,  he  may  be  com- 
pelled to  refund.  This  is  not  only  consonant  to  the  principles  of  sound 
policy  and  justice,  but  is  now  so  settled  by  authority,  whatever  doubts 
may  have  been  entertained  respecting  it  in  former  times. 

In  the  case  of  Smith  v.  Bromley,  2  Doug.  696,  note,  it  was  decided, 
that  the  plaintiff  was  entitled  to  recover  in  an  action  for  money  had 
and  received,  for  money  paid  by  the  plaintiff  to  the  defendant  for  the 
purpose  of  inducing  him  to  sign  the  certificate  of  a  bankrupt,  the 
plaintiff's  sister.  Lord  Mansfield  laid  down  the  doctrine  on  this 
point,  which  has  been  repeatedly  confirmed.  "If  the  act  is  in  itself 
immoral,  or  a  violation  of  the  general  laws  of  public  policy,  there 
the  party  paying  shall  not  have  this  action ;  for  where  both  parties  are 
equally  criminal  against  such  general  laws,  the  rule  is  potior  est  con- 
ditio defendentis.  But  there  are  other  laws  which  are  calculated 
for  the  protection  of  the  subjects  against  oppression,  extortion,  de- 
ceit, etc.  If  such  laws  are  violated,  and  the  defendant  takes  ad- 
vantage of  the  plaintiff's  condition  or  situation,  there  the  plaintiff 
shall  recover."  And  this  doctrine  was  afterwards  adhered  to  and 
confirmed  by  the  whole  court,  in  the  case  of  Jones  v.  Barkley,  2 
Doug.  684. 

On  this  distinction  it  has  ever  since  been  held,  that  where  usurious 
interest  has  been  paid,  the  excess  above  the  legal  interest  may  be 
recovered  back  by  the  borrower  in  an  action  for  money  had  and  re- 


302  LEGALITY   OF  OBJECT 

ceived  So  money  paid  to  a  lottery-office  keeper  as  a  premium  for 
an  illegal  insurance,  is  recoverable  back,  in  an  action  for  money  had 
and  received.  Jaques  v.  Golightly,  2  W.  Bl.  1073.  But  in  Browning 
V.  Morris,  Cowp.  790,  it  was  decided,  that  where  a  lottery-office 
keeper  pays  money  in  consequence  of  having  insured  the  defendant's 
tickets,  such  contract  being  prohibited  by  St.  17  Geo.  III.  c.  46,  he 
cannot  recover  it  back,  though  the  premium  of  insurance  paid  by  the 
insured  to  the  lottery-office  keeper  might  be.  The  distinction  on 
which  this  case  was  decided  is  very  n;iaterial  in  the  present  case. 
IwOrd  Mansfield  referred  to  the  determination  in  Jaques  v.  Golightly, 
where  it  was  said,  "that  the  statute  is  made  to  protect  the  ignorant 
and  deluded  multitude,  who,  in  hopes  of  gain  and  prizes,  and  not  con- 
versant in  calculations,  are  drawn  in  by  the  office  keepers."  And  he 
adds,  "It  is  very  material,  that  the  statute  itself,  by  the  distinction  it 
makes,  has  marked  the  criminal ;  for  the  penalties  are  all  on  one  side, 
— upon  the  office  keeper.  The  man  who  makes  the  contract  is  liable 
to  no  penalty.  So  in  usury  there  is  no  penalty  upon  the  party  who 
is  imposed  upon." 

The  same  distinction  is  noticed  and  enforced  by  Lord  Ellenborough, 
in  Williams  v.  Hedley,  8  East,  378.  In  that  case  it  was  decided,  that 
where  money  was  paid  to  a  plaintiff  to  compromise  a  qui  tam  action 
for  usury,  it  might  be  recovered  back  in  an  action  for  money  had 
and  received  ;  because  the  prohibition  and  penalties  of  St.  18  Eliz. 
c.  5,  attached!  only  on  "the  informer  or  plaintiff,  or  other  person  suing 
out  process  in  the  penal  action,  making  composition,  etc."  It  was  ar- 
gued for  the  defendant  in  that  case,  "that  as  the  act  of  the  defendant 
co-operated  with  that  of  the  plaintiff  in  producing  the  mischief  meant 
to  be  prevented  and  restrained  by  the  statute  it  was  so  far  illegal,  on 
the  part  of  the  defendant  himself,  as  to  preclude  him  from  any  rem- 
edy by  suit  to  recover  back  money  paid  by  him  in  furtherance  of  that 
object;  and  that  if  he  was  not  therefore  to  be  considered  as  strictly 
in  pari  delicto  with  the  plaintiff  in  the  qui  tam  action,  he  was  at  any 
rate  particeps  criminis,  and  in  that  respect  not  entitled  to  recover  from 
his  codelinquent,  money  which  he  had  paid  him  in  the  course  and 
prosecution  of  their  mutual  crime."  This  argument  >vas  overruled, 
and  Lord  Ellenborough  fully  approved  the  doctrine  laid  down  by 
Lord  Mansfield  in  Smith  v.  Bromley,  and  the  decisions  in  the  several 
cases  in  which  that  doctrine  had  been  confirmed. 

The  same  distinction  has  been  recognized  in  other  cases,  and  was 
adopted  by  this  court  in  Worcester  v.  Eaton,  11  Mass.  376,  in  which 
Parker,  C.  J.,  after  referring  to  the  above  cases,  said :  "This  dis- 
tinction seems  to  have  been  ever  afterwards  observed  in  the  English 
courts;  and,  being  founded  in  sound  principle,  is  worthy  of  adop- 
tion, as  a  principle  of  the  common  law  in  this  country." 

The  principle  is,  in  every  respect,  applicable  to  the  present  case, 
and  is  decisive.  The  prohibition  is  particularly  levelled  against  the 
bank,  and  not  against  any  person  dealing  with  the  bank.    In  the  words 


EFFECT   OF   ILLEGALITY  303 

of  Lord  ]\Tansfield,  "the  statute  itself,  by  the  distinction  it  makes,  has 
marked  the  criininal."  The  plaintiff  is  subject  to  no  penalty,  but  the 
defendants  are  liable,  for  the  violation  of  the  statute,  to  a  forfeiture 
of  their  charter.  To  decide  that  this  action  cannot  be  maintained 
would  be  to  secure  to  the  defendants  the  fruits  of  an  illegal  transac- 
tion, and  would  operate  as  a  temptation  to  all  banks  to  violate  the  stat- 
ute, by  taking  advantage  of  the  unwary  and  of  those  who  may  have 
no  actual  knowledge  of  the  existence  of  the  prohibition  of  the  statute, 
and  who  may  deal  with  a  bank  without  any  suspicion  of  the  illegality 
of  the  transaction  on  the  part  of  the  bank. 

There  is  still  another  ground  on  which  the  plaintiff's  counsel  rely. 
This  action  proceeds  in  disaffirmance  of  an  executory  illegal  con- 
tract, and  was  commenced  before  the  money  which  the  defendants 
contracted  to  pay  was  by  the  terms  of  the  contract  payable;  the  plain- 
tiff therefore  had  a  right  to  rescind  the  contract,  or  rather  to  treat  it 
as  a  void  contract,  and  to  recover  back  the  consideration  money. 

It  was  so  decided  in  Walker  v.  Chapman,  Lofft,  342,  where  money 
had  been  paid  in  order  to  procure  a  place  in  the  customs,  but  the 
place  had  not  been  procured;  and  in  an  action  brought  by  the  party 
who  paid  the  money.  It  was  held  that  he  should  recover,  because 
the  contract  continued  executory.  This  case  was  cited  with  approba- 
tion by  Buller,  J.,  in  Lowry  v.  Bourdieu,  2  Doug.  470;  and  the  dis- 
tinction between  contracts  executed  and  executory,  he  said,  was  a 
sound  one.  The  same  distinction  has  been  recognized  in  actions 
brought  to  recover  back  money  paid  on  illegal  wagers,  where  both 
parties  were  in  pari  delicto. 

The  case  of  Tappenden  v.  Randall.  2  Bos.  &  P.  467,  was  decided  on 
that  distinction.  Heath,  J.,  said :  "It  seems  to  me  that  the  distinc- 
tion adopted  by  Mr.  Justice  Buller  between  contracts  executory  and 
executed,  if  taken  with  those  modifications  which  he  would  neces- 
sarily  have  applied  to  it,  is  a  sound  distinction.  Undoubtedly  there 
may  be  cases  where  the  contract  may  be  of  a  nature  too  grossly  im- 
moral for  the  court  to  enter  into  any  discussion  of  it ;  as  where  one 
man  has  paid  money  by  way  of  hire  to  another  to  murder  a  third 
person.  But  where  nothing  of  the  kind  occurs,  I  think  there  ought  to 
be  locus  pccnitenti?e,  and  that  a  party  should  not  be  compelled  against 
his  will  to  adhere  to  the  contract."  The  same  distinction  is  recognized 
in  several  other  cases.  5  Term  R.  405;  1  H.  Bl.  67;  7  Term  R. 
535 ;  3  Taunt.  277 ;   4  Taunt.  290. 

In  the  case  of  Aubert  v.  Walsh,  3  Taunt.  277,  the  authorities  were 
considered,  and  the  law  was  definitely  settled  as  above  stated ;  and 
it  does  not  appear  that  it  has  ever  since  been  doubted.  In  Insurance 
Co.  V.  Kip,  8  Cow.  (N.  Y.)  20,  the  same  principle  is  recognized,  al- 
though the  case  was  not  expressly  decided  on  that  point.  The  distinc- 
tion seems  to  be  founded  in  wise  policy,  as  it  has  a  tendency  in  some 
measure  to  prevent  the  execution  of  unlawful  contracts,  and  can  in 
no  case  work  injustice  to  either  party. 


804  LEGALITY  OF  OBJECT 

It  is,  however,  denied  by  the  defendant's  counsel  that  the  contract 
in  question  was  executory,  within  the  true  intent  and  meaning  of 
these  decisions  and  the  doctrine  now  laid  down.  This  question  has 
not  been  much  discussed,  and  it  is  not  necessary  to  decide  it  in  the 
present  case,  the  court  being  clearly  of  opinion  that  the  plaintiff  is 
entitled  to  recover  on  the  other  grounds  mentioned.  We  have  con- 
sidered the  question  as  to  the  distinction  between  executory  and  ex- 
ecuted contracts,  because  it  may  be  of  some  importance  that  the  law 
in  that  respect  should  not  be  supposed  to  be  doubtful  in  our  opinion, 
which  might  be  inferred,  perhaps,  if  we  should  leave  this  question 
unnoticed. 

The  only  remaining  question  is,  whether  the  plaintiff  was  bound  to 
make  a  demand  on  the  bank  before  he  commenced  his  action.  The 
general  rule  is,  that  where  money  is  due  and  payable,  an  action  will 
lie  without  any  previous  demand.  But  where  money  is  deposited  in 
a  bank  in  the  usual  course  of  business,  we  should  certainly  hold  that 
a  previous  demand  would  be  requisite.  But  if  money  should  be  ob- 
tained by  a  bank  by  fraud,  or,  as  in  the  present  case,  by  means  of 
an  illegal  contract,  the  bank  claiming  to  hold  it  under  such  contract, 
there  can  be  no  good  reason  given  why  the  bank  should  be  exempted 
from  the  operation  of  the  general  rule.  In  Clark  v.  Moody,  17  Mass^ 
145,  it  was  held,  that  if  a  factor  should  render  an  untrue  account, 
claiming  a  greater  credit  than  he  was  entitled  to,  the  principal  would 
have  a  right  of  action  without  a  demand. 

If  the  defendants  had  sold  to  the  plaintiff  a  post-note  payable  at 
a  future  day,  it  could  hardly  be  doubted  that  an  action  would  lie 
to  recover  back  the  consideration  money,  without  any  previous  de- 
mand; and  there  seems  to  be  no  substantial  distinction  between  such 
a  case  and  the  one  in  question.    Judgment  on  default. 


OPEBATION  OF  CONTBAOT  805 

OPERATION  OF  CONTRACT 

I.  Limits  of  Contractual  Relation  * 

1.  Imposing  Liability  on  Third  Persons 

(A)  In  General 


BOSTON  ICE  CO.  v.  POTTER. 

(Snpreme   Judicial    Court   of    Massachusetts,    1877.     123    Mass.    28, 
25  Am.  Rep.  9.) 

Contract  on  an  account  annexed,  for  ice  sold  and  delivered  between 
April  1,  1874,  and  April  1,  1875.    Answer,  a  general  denial. 

At  the  trial  in  the  superior  court,  before  Wilkinson,  J.,  without  a 
jury,  the  plaintiff  oft'ered  evidence  tending  to  show  the  delivery  of  the 
ice  and  its  acceptance  and  use  by  the  defendant  from  April  1,  1874, 
to  April  1,  1875,  and  that  the  price  claimed  in  the  declaration  was  the 
market  price.  It  appeared  that  the  ice  was  delivered  and  used  at  the 
defendant's  residence  in  Boston,  and  the  amount  left  daily  was  regu- 
lated by  the  orders  received  there  from  the  defendant's  servants ;  that 
the  defendant,  in  1873,  was  supplied  with  ice  by  the  plaintiff,  but,  on 
account  of  some  dissatisfaction  with  the  manner  of  supply,  terminated 
his  contract  with  it;  that  the  defendant  then  made  a  contract  with 
the  Citizens'  Ice  Company  to  furnish  him  with  ice;  that  some  time 
before  April,  1874,  the  Citizen's  Ice  Company  sold  its  business  to  the 
plaintiff,  with  the  privilege  of  supplying  ice  to  its  customers.  There 
was  some  evidence  tending  to  show  that  the  plaintiff  gave  notice  of 
this  change  of  business  to  the  defendant,  and  informed  him  of  its 
intended  supply  of  ice  to  him;  but  this  was  contradicted  on  the  part 
of  the  defendant. 

The  judge  found  that  the  defendant  received  no  notice  from  the 
plaintiff  until  after  all  the  ice  had  been  delivered  by  it,  and  that  there 
was  no  contract  of  sale  between  the  parties  to  this  action  except  what 
was  to  be  implied  from  the  delivery  of  the  ice  by  the  plaintiff'  to  the 
defendant  and  its  use  by  him;  and  ruled  that  the  defendant  had  a 
right  to  assume  that  the  ice  in  question  was  delivered  by  the  Citizens' 
Ice  Company,  and  that  the  plaintiff  could  not  maintain  this  action. 
The  plaintiff  alleged  exceptions. 

Eni>icott,  J.  To  entitle  the  plaintiff  to  recover,  it  must  show  some 
contract  with  the  defendant.     There  was   no  express  contract,  and 

1  For  discussion  of  idiiiciijles,  see  Ciarlc  ou  CouLracls  (L'd  Ed.)  §§   lSS-192. 
Thbockm.Co.nt. — 20 


306  OPERATION   OF  CONTEACT 

Upon  the  facts  stated  no  contract  is  to  be  implied.  The  defendant  had 
taken  ice  from  the  plaintiff  in  1873,  but,  on  account  of  some  dissatis- 
faction with  the  manner  of  supply,  he  terminated  his  contract,  and 
made  a  contract  for  his  supply  with  the  Citizens'  Ice  Company.  The 
plaintiff  afterward  delivered  ice  to  the  defendant  for  one  year  without 
notifying  the  defendant,  as  the  presiding  judge  has  found,  that  it  had 
bought  out  the  business  of  the  Citizens'  Ice  Company,  until  after  the 
delivery  and  consumption  of  the  ice. 

The  presiding  judge  has  decided  that,  the  defendant  had  a  right  to 
assume  that  the  ice  in  question  was  delivered  by  the  Citizens'  Ice 
Company,  and  has  thereby  necessarily  found  that  the  defendant's  con- 
tract with  that  company  covered  the  time  of  the  delivery  of  the  ice. 

There  was  no  privity  of  contract  established  between  the  plaintiff 
and  defendant,  and  without  such  privity  the  possession  and  use  of 
the  property  will  not  support  an  implied  assumpsit.  Hills  v.  Snell, 
104  Mass.  173,  177,  6  Am.  Rep.  216.  And  no  presumption  of  assent 
can  be  implied  from  the  reception  and  use  of  the  ice,  because  the  de- 
fendant had  no  knowledge  that  it  was  furnished  by  the  plaintiff,  but 
supposed  that  he  received  it  under  the  contract  made  with  the  Citi- 
zens' Ice  Company.    Of  this  change  he  was  entitled  to  be  informed. 

A  party  has  a  right  to  select  and  determine  with  whom  he  will  con- 
tract, and  cannot  have  another  person  thrust  upon  him  without  his 
consent.  It  may  be  of  importance  to  him  who  performs  the  contract, 
as  when  he  contracts  with  another  to  paint  a  picture,  or  write  a  book, 
or  furnish  articles  of  a  particular  kind,  or  when  he  relies  upon  the 
character  or  qualities  of  an  individual,  or  has,  as  in  this  case,  reasons 
why  he  does  not  wish  to  deal  with  a  particular  party.  In  all  these 
cases,  as  he  may  contract  with  whom  he  pleases,  the  sufficiency  of  his 
reasons  for  so  doing  cannot  be  inquired  into.  If  the  defendant,  before 
receiving  the  ice,  or  during  its  delivery,  had  received  notice  of  the 
change,  and  that  the  Citizens'  Ice  Company  could  no  longer  perform 
its  contract  with  him,  it  would  then  have  been  his  undoubted  right  to 
have  rescinded  the  contract  and  to  decline  to  have  it  executed  by  the 
plaintiff.  But  this  he  was  unable  to  do,  because  the  plaintiff  failed  to 
inform  him  of  that  which  he  had  a  right  to  know.  Orcutt  v.  Nelson, 
1  Gray,  536,  542 ;  Winchester  v.  Howard,  97  Mass.  303,  93  Am.  Dec. 
93 ;  Hardman  v.  Booth,  1  Hurl.  &  C.  803 ;  Humble  v.  Hunter,  12  Q. 
B.  Div.  310;  Robson  v.  Drummond,  2  Barn.  &  Adol.  303.  If  he  had 
received  notice  and  continued  to  take  the  ice  as  delivered,  a  contract 
would  be  implied.  Mudge  v.  Oliver,  1  Allen,  74;  Orcutt  v.  Nelson, 
ubi  supra;   Mitchell  v.  Lapage,  Holt,  N.  P.  253. 

There  are  two  English  cases  very  similar  to  the  case  at  bar.  In 
Schmaling  v.  Thomlinson,  6  Taunt.  147,  a  firm  was  employed  by  the 
defendants  to  transport  goods  to  a  foreign  market,  and  transferred 
the  entire  employment  to  the  plaintiff,  who  performed  it  without  the 
privity  of  the  defendants,  and  it  was  held  that  he  could  not  recover 
compensation  for  his  services  from  the  defendants. 


LIMITS   OF  CONTRACTUAL  RELATION  307 

The  case  of  Boulton  v.  Jones,  2  Hurl.  &  N.  564,  was  cited  by  both 
parties  at  the  argument.  There  the  defendant,  who  had  been  in  the 
habit  of  dealing  with  one  Brocklehurst,  sent  a  written  order  to  him 
for  goods.  The  plaintiff,  who  had  on  the  same  day  bought  out  the 
business  of  Brocklehurst,  executed  the  order  without  giving  the  defend- 
ant notice  that  the  goods  were  supplied  by  him  and  not  by  Brockle- 
hurst. And  it  was  held  that  the  plaintiff  could  not  maintain  an  ac- 
tion for  the  price  of  the  goods  against  the  defendant.  It  is  said  in  that 
case  that  the  defendant  had  a  right  of  set-off  against  Brocklehurst, 
with  whom  he  had  a  running  account,  and  that  is  alluded  to  in  the 
opinion  of  "Baron  Bramwell  though  the  other  judges  do  not  mention  it. 

The  fact  that  a  defendant  in  a  particular  case  has  a  claim  in  set- 
off against  the  original  contracting  party  shows  clearly  the  injustice 
of  forcing  another  person  upon  him  to  execute  the  contract  without 
his  consent,  against  whom  his  set-off  would  not  be  available.  But  the 
actual  existence  of  the  claim  in  set-off  cannot  be  a  test  to  determine 
that  there  is  no  implied  assumpsit  or  privity  between  the  parties.  Nor 
can  the  non-existence  of  a  set-off  raise  an  implied  assumpsit.  If  there 
is  such  a  set-off,  it  is  sufficient  to  state  that,  as  a  reason  why  the  de- 
fendant should  prevail;  but  it  by  no  means  follows  that  because  it 
does  not  exist  the  plaintiff  can  m.aintain  his  action.  The  right  to  main- 
tain an  action  can  never  depend  upon  whether  the  defendant  has  or 
has  not  a  defence  to  it. 

The  implied  assumpsit  arises  upon  the  dealings  between  the  parties 
to  the  action,  and  cannot  arise  upon  the  dealings  between  the  defend- 
ant and  the  original  contractor,  to  which  the  plaintiff  was  not  a  party. 
At  the  same  time,  the  fact  that  the  right  of  set-off  against  the  original 
contractor  could  not,  under  any  circumstances,  be  availed  of  in  an 
action  brought  upon  the  contract  by  the  person  to  whom  it  was  trans- 
ferred and  who  executed  it,  shows  that  there  is  no  privity  between 
the  parties  in  regard  to  the  subject  matter  of  this  action. 

It  is,  therefore,  immaterial  that  the  defendant  had  no  claim  in  set- 
off against  the  Citizens'  Ice  Company. 

We  are  not  called  upon  to  determine  what  other  remedy  the  plain- 
tiff has,  or  what  would  be  the  rights  of  the  parties  if  the  ice  were 
now  in  existence.    Exceptions  overruled. 


308  OPERATION    OF   CONTRACTT 


(B)  Liability  for  Inducing  Party  to  Break  Contract 


PERKINS  V.  PENDLETON  et  al. 

(Supreme  Judicial  Court  of  Maine,   1897.     90  Me.   166,  38  Atl.  96, 
60  Am.  St  Rep.  252.) 

Action  by  Webster  C.  Perkins  against  Fremont  Pendleton  and  oth- 
ers. From  an  order  overruling  a  demurrer  to  the  declaration,  de- 
fendants except. 

WiswELL,  J.  To  the  plaintiff's  declaration,  which  appears  in  full 
in  the  statement  of  the  case,  the  defendants  filed  a  general  demurrer, 
which  was  overruled  by  the  justice  presiding  at  nisi  prius,  and  the  dec- 
laration adjudged  good.  The  case  comes  to  the  law  court  upon  excep- 
tions to  this  ruling. 

The  plaintiff  alleges  that  upon  a  certain  day  he  was,  and  for  22 
years  prior  to  that  time  had  been,  in  the  employ  of  the  Mt.  Waldo 
Granite  Company  as  a  stone  cutter,  working  by  the  piece ;  that  he  was 
making  large  profits  out  of  his  employment;  that  he  would  have 
continued  in  such  employment  from  the  day  named  until  the  date  of 
his  writ  "but  for  the  wrongful  acts,  inducements,  threats,  persuasions, 
and  grievances  committed  by  said  defendants  against  the  said  plain- 
tiff as  hereinafter  set  forth ;"  that  on  the  day  named,  and  "at  div^ers 
other  times  thereafter  until  the  date  of  the  plaintiff's  writ,"  the  de- 
fendants "did  unlawfully  and  without  justifiable  cause,  molest,  ob- 
struct, and  hinder  the  plaintiff  from  carrying  on  his  said  trade,  oc- 
cupation, or  business  as  a  stone  cutter  for  the  said  Mt.  Waldo  Gran- 
ite Company,  and  wrongfully,  unlawfully,  and  unjustly  had  him  dis- 
charged without  any  justifiable  cause  from  the  employment  of  the 
said  Mt.  Waldo  Granite  Company  by  willfully  threatening,  persuading, 
inducing,  and  by  other  overt  acts  compelling,  the  said  Mt.  Waldo 
Granite  Company,  against  its  will,  and  without  any  desire  on  its  part 
so  to  do,  to  discharge  the  said  plaintiff  from  its  employ  for  the  sole 
reason  that  the  plaintiff  would  not  become  a  member  in  the  order  of 
the  Mt.  .Waldo  Branch  of  the  Granite  Cutters'  National  Union"; 
whereby  he  suffered  the  injury  specially  set  out  in  his  declaration. 

Does  this  statement  of  facts  sufficiently  set  out  an  actionable  wrong 
upon  the  part  of  the  defendants?  That  an  action  lies  under  certain 
circumstances  for  procuring  a  third  person  to  break  his  contract  with 
the  plaintiff  has  been  frequently  decided  by  the  courts  of  England  and 
of  this  country. 

In  Lumley  v.  Gye,  2  El.  &  Bl.  216,  decided  in  1853,  the  action  was 
for  knowingly  and  maliciously  inducing  an  opera  singer  to  break  her 
contract  with  the  plaintiff'  to  perform  exclusively  for  a  certain  -time 


LIMITS   OF   CONTRACTUAL   RELATION  309 

in  his  theater.     The  right  of  action  was  sustained  by  a  majority  of 
the  court. 

In  Bowen  v.  Hall,  6  Q.  B.  Div.  333,  decided  in  1881,  a  person  had 
contracted  to  manufacture  glazed  bricks  for  the  plaintiff,  and  not  to 
engage  himself  to  any  one  else  for  a  term  of  five  years.  The  Eng- 
lish court  of  appeals  held  that  an  action  could  be  maintained  against 
the  defendant  for  maliciously  procuring  a  breach  of  this  contract,  pro- 
vided damage  accrued ;  and  that  to  sustain  the  action  it  was  not  nec- 
essary that  the  employer  and  employe  should  stand  in  the  strict  re- 
lation of  master  and  servant.  It  was  said  by  the  court  in  this  case : 
"That  wherever  a  man  does  an  act  which  in  law  and  in  fact  is  a 
wrongful  act,  and  such  an  act  as  may,  as  a  natural  and  probable  con- 
sequence of  it,  produce  injury  to  another,  and  which  in  the  par- 
ticular case  does  produce  such  an  injury,  an  action  on  the  case  will 
lie.  *  *  *  If  these  conditions  are  satisfied,  the  action  does  not 
the  less  lie  because  the  natural  and  probable  consequence  of  the  act 
complained  of  is  an  act  done  by  a  third  person,  or  because  such  act 
so  done  by  the  third  person  is  a  breach  of  duty  or  contract  by  him, 
or  an  act  illegal  on  his  part,  or  an  act  otherwise  imposing  an  action- 
able liability  on  him.  *  *  ♦  Merely  to  persuade  a  person  to  break 
his  contract  may  not  be  wrongful  in  law  or  fact,  ♦  *  ♦  but,  if 
the  persuasion  be  used  for  the  indirect  purpose  of  injuring  the  plain- 
tiff or  of  benefiting  the  defendant  at  the  expense  of  tfie  plaintiff,  it  is 
a  malicious  act,  which  is  in  law  and  in  fact  a  wrong  act,  and  there- 
fore an  actionable  act  if  injury  ensued  from  it." 

The  doctrine  of  these  cases  has  been  very  generally  adopted,  and 
the  cases  themselves  very  frequently  cited,  by  the  courts  of  this  coun- 
try. Walker  v.  Cronin,  107  Mass.  555 ;  Bixby  v.  Dunlap,  56  N.  H. 
456,  22  Am.  Rep.  475 ;  Noice  v.  Brown,  39  N.  J.  Law,  569 ;  Haskins 
V.  Royster,  70  N.  C.  601,  16  Am.  Rep.  780;  Daniel  v.  Swearengen,  6 
S.  C.  297,  24  Am.  Rep.  471. 

In  view  of  these  authorities  and  others,  which  it  is  not  necessary  to 
refer  to,  it  must  be  conceded  that  for  a  person  to  wrongfully — that  is, 
by  the  employment  of  unlawful  or  improper  means — induce  a  third 
party  to  break  a  contract  with  the  plaintiff,  whereby  injury  will  nat- 
urally and  probably,  and  does  in  fact,  ensue  to  the  plaintiff,  is  ac- 
tionable; and  the  rule  applies  both  upon  principle  and  authority  as 
well  to  cases  where  the  employer  breaks  his  contract  as  where  it  is 
broken  by  the  employe ;  in  fact  it  is  not  confined  to  contracts  of  em- 
ployment. 

But  in  this  case  the  plaintiff  does  not  allege  that  the  Mt.  Wal^lo 
Granite  Company  was  induced  by  the  wrongful  means  adopted  by  the 
defendants  to  break  a  contract,  nor  that  there  was  any  contract  between 
the  plaintiff  and  the  employer  for  any  definite  time.  We  must,  there- 
fore, assume  that  there  was  none,  that  either  party  had  the  right  tp 
terminate  the  employment  at  any  time,  and  that  the  act  of  the  Mt. 
Waldo  Company  in  discharging  the  plaintiff  was  lawful,  and  one  which 


310  OPERATION  OF  CONTRACT 

the  company  had  a  perfect  right  to  do  at  any  time.  The  question  pre- 
sented, then,  is  whether  a  person  can  be  liable  in  damages  for  inducing 
and  persuading,  by  threats  or  other  unlawful  means,  an  employer  to 
discharge  his  employe  when  the  terms  of  the  contract  of  service  are 
such  that  the  employer  may  do  this  at  his  pleasure,  without  violating 
any  legal  right  of  the  employe.  The  question  is  a  novel  one  in  this 
state,  but  it  has  already  arisen  and  been  passed  upon  by  the  courts  of 
some  other  states. 

In  Walker  v.  Cronin,  107  Mass.  555,  the  plaintiffs  alleged  that  the 
defendant  did  "unlawfully  and  without  justifiable  cause,  molest,  ob- 
struct, and  hinder  the  plaintiffs  from  carrying  on"  their  business  of 
manufacture  and  sale  of  boots  and  shoes,  "with  the  unlawful  purpose 
of  preventing  the  plaintiffs  from  carrying  on  their  said  business,  and 
willfully  persuaded  and  induced  a  large  number  of  persons  who  were 
in  the  employment  of  the  plaintiff,"  and  others  "who  were  about  to 
enter  into"  their  employment,  "to  leave  and  abandon  the  employment 
of  the  plaintiff,  without  their  consent  and  against  their  will,"  and  al- 
leged that  the  plaintiffs  lost  the  services  of  said  persons  and  the  profits 
and  advantages  they  would  otherwise  have  made,  and  suffered  losses 
in  their  business.  It  will  be  noticed  that  there  is  no  allegation  here  of 
any  definite  contract  as  to  time  between  the  plaintiffs  and  their  em- 
ployes who  were  induced  to  leave  their  employment,  and  one  ground 
of  action  was  that  certain  persons  who  were  about  to  enter  into  their 
employment,  but  who  had  not  commenced  at  the  time,  were  induced  to 
leave  and  abandon  the  employment  of  the  plaintiffs.  But  the  court 
held  in  an  exhaustive  opinion,  which  has  been  frequently  cited  by 
other  courts  in  this  country,  and  which  was  cited  by  counsel  in  the 
argument  in  Bowen  v.  Hall,  supra,  that  the  action  could  be  maintained. 

It  is  said  in  the  opinion:  "This  [declaration]  sets  forth  sufficiently 
(1)  intentional  and  willful  acts  (2)  calculated  to  cause  damage  to  the 
plaintiffs  in  their  lawful  business,  (3)  done  with  the  unlawful  purpose 
to  cause  such  damages  and  loss,  without  right  or  justifiable  cause  on 
the  part  of  the  defendant  (which  constitutes  malice),  and  (4)  actual 
damage  and  loss  resulting."  The  court  quotes  the  general  principles 
as  announced  in  Comyns'  Digest,  "Action  upon  the  Case":  "In  all 
cases  where  a  man  has  a  temporal  loss  or  damage  by  the  wrong  of 
another,  he  may  have  an  action  upon  the  case  to  be  repaired  in  dam- 
ages ;"  and  goes  on  to  say  that  "the  intentional  causing  of  such  loss  to 
another,  without  justifiable  cause,  and  with  a  malicious  purpose  to  in- 
flict it,  is  of  itself  a  wrong."  Later  in  the  opinon  the  court  uses  this 
language:  "Every  one  has  a  right  to  enjoy  the  fruits  and  advantages 
of  his  own  enterprise,  industry,  skill,  and  credit.  He  has  no  right  to 
be  protected  against  competition ;  but  he  has  a  right  to  be  free  from 
malicious  and  wanton  interference,  disturbance,  or  annoyance.  If  dis- 
turbance or  loss  come  as  a  result  of  competition  or  the  exercise  of 
like  rights  by  others,  it  is  damnum  absque  injuria,  unless  some  su- 
perior right  by  contract  or  otherwise  is  interfered  with.     But  if  it 


LIMITS   OF   CONTRACTUAL   RELATION  311 

come  from  the  merely  wanton  or  malicious  acts  of  others,  without  the 
justification  of  competition  or  the  service  of  any  interest  or  lawful 
purpose,  it  then  stands  upon  a  different  footing,  and  falls  within  the 
principle  of  the  authorities  first  referred  to." 

This  case  was  not  decided  upon  the  ground  that  the  plaintiffs  could 
recover  for  the  loss  of  the  value  of  actual  contracts  by  reason  of  their 
nonfulfillment,  because,  so  far  as  the  case  shows,  there  was  no  breach 
of  contract,  but  the  gravamen  of  the  action  was,  as  expressed  by  the 
court,  "the  loss  of  advantages,  either  of  property  or  of  personal  ben- 
efit, which,  but  for  such  interference,  the  plaintiff'  would  have  been 
able  to  attain  or  enjoy." 

In  Chipley  v.  Atkinson,  23  Fla.  206,  1  South.  934,  11  Am.  St.  Rep. 
367,  the  court  decided  that,  although  no  contract  existed  between  the 
master  and  servant,  and  no  legal  right,  as  between  them,  was  violated, 
still  the  servant  may  maintain  an  action  for  damages  against  a  third 
person  who  has  maliciously  procured  his  discharge.  The  court,  in 
its  opinion,  after  quoting  freely  from  Walker  v.  Cronin,  supra,  and 
after  referring  to  numerous  other  authorities,  says :  "From  the  au- 
thorities referred  to  in  the  last  preceding  paragraph,  and  upon  prin- 
ciple, it  is  apparent  that  neither  the  fact  that  the  term  of  service  in- 
terrupted is  not  for  a  fixed  period  nor  the  fact  that  there  is  not  a 
right  of  action  against  the  person  who  is  induced  or  influenced  to 
terminate  the  service  or  to  refuse  to  perform  his  agreement  is  of  itself 
a  bar  to  an  action  against  the  third  person  maliciously  and  wantonly 
procuring  the  termination  of  or  a  refusal  to  perform  the  agreement. 
It  is  the  legal  right  of  the  party  to  such  agreement  to  terminate  it 
or  refuse  to  perform  it,  and  in  doing  so  he  violates  no  right  of  the 
other  party  to  it ;  but,  so  long  as  the  former  is  willing  and  ready  to 
perform,  it  is  not  the  legal  right,  but  is  a  wrong,  on  the  part  of  a  third 
party  to  maliciously  and  wantonly  procure  the  former  to  terminate  or 
refuse  to  perform  it." 

In  Lucke  v.  Assembly,  77  Md.  396,  26  Atl.  505,  19  L.  R.  A.  408, 
39  Am.  St.  Rep.  421,  decided  in  1893,  the  action  was  to  recover  dam- 
ages for  the  wrongful  and  malicious  interference  of  the  defendant, 
by  means  of  which  the  plaintiff  was  discharged  from  his  employment, 
and  thereby  deprived  of  his  means  of  livelihood.  The  defendant,  a 
labor  organization,  gave  notice  to  the  plaintiff's  employers  that  in 
case  the  plaintiff,  a  nonunion  man,  was  longer  retained,  it  would  be 
compelled  to  notify  all  labor  organizations  of  the  city  that  their  house 
was  a  nonunion  house.  The  work  of  the  plaintiff  was  entirely  satis- 
factory to  his  employers,  who  intended  to  retain  him  permanently, 
but  who,  in  their  contract,  reserved  the  right  to  discharge  him  at  the 
end  of  any  week.  The  court  decided  that  the  action  could  be  main- 
tained, and  damages  recovered  from  the  defendant  for  maliciously 
and  wantonly  procuring  his  discharge.  In  that  case  the  declaration 
alleged  the  procurement  of  a  breach  of  contract  by  the  wrongful  acts 
of  the  defendant. 


312  OPERATION  OF  CONTRACT 

The  court  held  that  the  evidence  did  not  sustain  the  declaration, 
but  allowed  an  amendment,  saying:  "If  there  was  no  agreement  for 
any  particular  period  of  time,  but  the  employment  was  one  in  which 
the  agreement  was  that  plaintiff  should  be  given  employment  as  long 
as  he  performed  his  work  satisfactorily,  and  he  has  been  discharged 
from  it  solely  through  the  malicious  and  wrongful  procurement  of 
the  defendant,  and  injury  has  resulted,  he  should  have  laid  his  case 
accordingly."  We  also  quote  from  the  same  opinion,  the  following: 
"The  appellant,  by  the  action  of  the  appellee,  lost  his  place  in  the 
month  of  February,  and,  although  persistently  in  quest  of  a  position, 
he  did  not  succeed  in  obtaining  work  until  the  following  April,  when 
he  secured  employment  with  a  merchant  tailor  at  five  dollars  less 
per  week  than  he  was  receiving  when  he  was  discharged.  It  would 
be  strange,  indeed,  if  the  law,  under  such  a  state  of  facts  as  this  rec- 
ord exhibits,  provided  no  remedy."  In  this  latter  case  Chipley  v.  At- 
kinson, supra,  is  quoted,  and  expressly  approved. 

In  Raycroft  v.  Tayntor,  68  Vt.  219,  35  Atl.  53,  33  L.  R.  A.  225,  54 
Am.  St.  Rep.  882  decided  in  1896,  it  was  held  that  one  who  procures 
the  discharge  of  an  employe,  not  engaged  for  any  definite  time,  by 
threatening  to  terminate  a  contract  between  himself  and  the  employer, 
which  he  had  a  right  to  terminate  at  any  time,  is  not  subject  to  an 
action  by  the  employe  for  damages,  whatever  may  have  been  his  mo- 
tive in  procuring  the  discharge.  But  the  doctrine  of  the  later  cases 
cited  in  this  opinion  was  expressly  recognized  and  approved  by  the 
court  in  this  language:  "The  authorities  cited  for  the  plaintiff  clear- 
ly establish  that  if  the  defendant,  without  having  any  lawful  right, 
or  by  an  act  or  threat  aliunde  the  exercise  of  a  lawful  right,  had 
broken  up  the  contract  relation  between  the  plaintiff  and  Liversont, 
maliciously  or  unlawfully,  although  such  relation  could  be  terminated 
at  the  pleasure  of  either,  and  damage  had  thereby  been  occasioned, 
the  party  damaged  could  have  maintained  an  action  against  the  de- 
fendant therefor." 

In  Harvester  Co.  v.  Meinhardt,  24  Hun  (N.  Y.)  489,  the  court  said : 
"A  distinction  has  been  sought  to  be  made  between  the  cases  where 
there  has  been  an  unexpired  time  contract  and  cases  where  the  serv- 
ices were  by  the  day,  or  by  the  piece,  but  I  do  not  think  such  distinc- 
tion rests  upon  any  sound  reason.  *  *  *  In  such  case  the  injury 
to  the  property  and  business  of  the  employer  would  not  consist  so 
much  in  breaking  the  contract  which  existed  as  in  the  loss  of  profits 
derived  from  the  work  of  the  laborer  if  he  continued  in  the  employ- 
ment; and  the  probability  or  certainty  of  such  loss  would  be,  in  each 
rase,  a  question  of  fact." 

The  safne  principle  has  been  applied  to  the  procurement,  by  wrong- 
ful means,  of  the  breach  of  contracts  of  sale.  For  instance,  in  the 
case  of  Benton  v.  Pratt,  2  Wend.  (N.  Y.)  385,  20  Am.  Dec.  623,  the 
plaintiff  had  made  an  oral  contract  for  the  sale  of  chattels.  The 
contract  was  not  enforceable,  because  within  the  statute  of  frauds. 


LIMITS   OF   CONTRACTUAL   RELATION  313 

The  defendant  fraudulently  represented  that  the  plaintiff  did  not  in- 
tend to  carry  out  the  contract,  and  deliver  the  chattels,  and  thereby 
procured  a  breach  of  the  contract  by  the  other  party  to  it.  It  was 
said  by  the  court :  "It  is  not  material  whether  the  contract  of  the 
plaintiff  with  Seagraves  &  Wilson  was  binding  on  them  or  not.  The 
evidence  established  beyond  all  question  that  they  would  have  ful- 
filled it  but  for  the  false  and  fraudulent  representations  of  the  de- 
fendant." 

And  in  Rice  v.  Manley,  66  N.  Y.  82,  23  Am.  Rep.  30,  one  S.  had 
contracted  by  parol  to  sell  and  deliver  to  the  plaintiff  a  quantity  of 
cheese,  but,  being  made  to  believe,  by  the  fraud  of  the  defendant,  that 
the  plaintiff  did  not  want  the  cheese,  sold  it  to  the  defendant.  The 
contract  was  not  binding  because  within  the  statute  of  frauds,  but  it 
would  have  been  performed  by  S.  had  it  not  been  for  the  fraud  of 
the  defendant.  The  court  held  that  an  action  was  maintainable 
against  the  defendant  therefor. 

Our  conclusion  is  that  wherever  a  person,  by  means  of  fraud  or  in- 
timidation, procures  either  the  breach  of  a  contract  or  the  discharge 
of  a  plaintiff  from  an  employment,  which,  but  for  such  wrongful  in- 
terference, would  have  continued,  he  is  liable  in  damages  for  such  in- 
juries as  naturally  result  therefrom;  and  that  the  rule  is  the  same 
whether  by  these  wrongful  means  a  contract  of  employment  defi- 
nite as  to  time  is  broken,  or  an  employer  is  induced,  solely  by  reason 
of  such  procurement,  to  discharge  an  employe  whom  he  would  other- 
wise have  retained. 

The  case  of  Heywood  v.  Tillson,  75  Me.  225,  46  Am.  Rep.  373,  in 
no  way  conflicts  with  this  result.  There  the  court  simply  decided  that 
the  defendant  was  not  liable  for  doing  what  he  had  a  perfect  and  ab- 
solute right  to  do,  even  if  in  doing  this  he  was  actuated  by  a  malicious 
motive  against  the  plaintiff.  Many  cases  were  cited  to  the  eft'ect  that 
"malicious  motives  make  a  bad  act  worse,  but  they  cannot  make  that 
wrong  which  in  its  own  essence  is  lawful." 

We  think  that  the  important  question  in  an  action  of  this  kind  is 
as  to  the  nature  of  the  defendant's  act,  and  the  means  adopted  by 
him  to  accomplish  his  purpose.  Merely  to  induce  another  to  leave  an 
employment,  or  to  discharge  an  employe,  by  persuasion  or  argument, 
however  whimsical,  unreasonable,  or  absurd,  is  not,  in  and  of  itself, 
unlawful,  and  we  do  not  decide  that  such  interference  may  become  un- 
lawful by  reason  of  the  defendant's  malicious  motives,  but  simply  that 
to  intimidate  an  employer  by  threats,  if  the  threats  are  of  such  a 
character  as  to  produce  this  result,  and  thereby  cause  him  to  dis- 
charge an  employe  whom  he  desired  to  retain,  and  would  iiave  re- 
tained, except  for  such  unlawful  threats,  is  an  actionable  wrong.  Nor 
do  we  differ  from  the  recent  decision  of  the  Vermont  court  in  the 
case  above  referred  to,  which  holds  that  a  threat  to  do  what  the  de- 
fendant had  a  right  to  do  would  not  be  such  a  one  as  to  make  a  de- 
fendant liable  in  an  action  of  this  kind. . 


314  OPERATION  OF  CONTEACT 

It  is  the  opinion  of  the  court  that  the  plaintiff's  declaration  fairly 
sets  out  a  cause  of  action  in  accordance  with  these  principles;  that 
the  question  is  one  of  proof,  rather  than  of  pleading ;  and  that,  if  the 
plaintiff  can  prove  the  essential  allegations  contained  in  his  declara- 
tion, he  is  entitled  to  recover.    Exceptions  overruled. 


2.  Conferring  Rights  on   Third   Persons 
(A)  Massachusetts  Doctrine 


BORDEN  et  al.  v.   BOARDMAN. 

(Supreme  Judicial  Court  of  Massachusetts,  1892.     157  Mass.  410, 
32  N.  E.  469.) 

Action  by  Clara  H.  Borden  and  others  against  John  W.  Boardman 
to  enforce  an  agreement  between  a  third  party  and  the  defendant  in 
favor  of  the  plaintiffs.     Case  reported  to  the  supreme  judicial  court. 

Morton,  J.  The  evidence  offered  in  bar  was  rightly  excluded. 
The  subsequent  failure  of  Collins  to  perform  his  contract  would  not 
release  the  defendant  from  the  obligation,  if  any,  which  he  had  as- 
sumed to  the  plaintiff,  in  the  absence  of  any  agreement,  express  or 
implied,  that  the  money  was  to  be  paid  to  the  plaintiff  only  in  case 
Collins  fulfilled  his  contract.  Cook  v.  Wolfendale,  105  Mass.  401. 
There  was  no  evidence  of  such  an  agreement. 

The  other  question  is  more  difficult.  The  case  does  not  pre- 
sent a  question  of  novation,  for  there  was  no  agreement  between  the 
plaintiff  Collins  and  the  defendant  {hat  the  latter  should  pay  to  the 
plaintiffs,  out  of  the  money  in  his  hands,  and  due  to  Collins,  a  specific 
sum,  and  that  thenceforward  the  defendant  should  be  released  from 
all  liability  for'it  to  Collins,  and  should  be  liable  for  it  to  the  plain- 
tiffs. There  was  no  agreement  between  the  plaintiffs  and  the  defend- 
ant that  the  latter  would  pay  the  money  to  them.  The  conversation 
between  one  of  the  plaintiffs  and  the  defendant  cannot  be  construed 
as  affording  evidence  of  such  an  agreement.  At  the  same  instant  that 
the  defendant  admitted  that  he  was  holding  money  for  the  plaintiffs, 
he  repudiated  any  liability  to  the  plaintiffs  for  it.  Neither  can  it  be 
claimed  that  there  was  an  equitable  assignment  of  the  amount  in 
suit  from  ColHns  to  the  plaintiffs.  There  was  no  order  or  transfer 
given  by  him  to  them,  nor  was  any  notice  of  the  arrangement  be- 
tween him  and  the  defendant  given  by  him  to  the  plaintiffs.  Laz- 
arus V.  Swan,  147  Mass.  330,  17  N.  E.  655. 

The  case  upon  this  branch,  therefore,  reduced  to  its  simplest  form, 


LIMITS   OF   CONTRACTUAL  RELATION  315 

is  one  of  an  agreement  between  two  parties — upon  sufficient  consider- 
ation, it  may  be,  between  them — that  one  will  pay  out  of  funds  in 
his  hands,  belonging  to  the  other,  a  specific  sum  to  a  third  person, 
who  is  not  a  party  to  the  agreement,  and  from  whom  no  considera- 
tion moves.  It  is  well  settled  in  this  state  that  no  action  lies  in  such 
a  case  in  favor  of  such  third  party  to  recover  the  money  so  held  of 
the  party  holding  it.  Banl<  v.  Rice,  107  Mass.  Z7 ,  9  Am.  Rep.  1,  and 
cases  cited;  Rogers  v.  Stone  Co.,  130  Mass.  581,  39  Am.  Rep.  478; 
New  England  Dredging  Co.  v.  Rockport  Granite  Co.,  149  Mass.  381, 
21  N.  E.  947;  Marston  v.  Bigelow,  150  Mass.  45,  22  N.  E.  71,  5 
L.  R.  A.  43;  Saunders  v.  Saunders,  154  Mass.  337,  28  N.  E.  270. 
Certain  exceptions  which  were  supposed  to  exist  have  either  been 
shown  not  to  exist,  or  have  been  confined  within  narrower  limits. 
Bank  v.  Rice,  supra ;    IMarston  v.  Bigelow,  supra. 

We  have  assumed  that  the  sum  which  the  defendant  agreed  with 
Collins  to  pay  the  plaintiffs  was  specific.  But  it  is  to  be  observed 
that  the  agreement  between  the  plaintiffs  and  Collins  was  that  it 
should  not  cost  more  than  $150  to  put  the  building  back.  Collins  told 
the  defendant  that  there  was  $150  due  to  the  plaintiffs.  The  de- 
fendant reserved  $200.  It  may  well  be  doubted,  therefore,  whether 
the  defendant  had  in  his  hands  a  specific  sum  to  be  paid  to  the  plain- 
tiffs, or  whether  he  agreed  with  Collins  to  hold  and  pay  the  plaintiffs 
a  specific  sum.  If  the  sum  was  not  specific  the  plaintiffs  do  not  claim, 
as  we  understand  them,  that  they  can  recover.  Judgment  for  the 
defendant. 


(B)  New  York  Doctrine 


LAWRENCE  V.  FOX. 

(Conrt  of  Appeals  of  New  York,  1859.     20  N.  Y.  268.) 

H.  Gray,  J,'  The  first  objection  raised  on  the  trial  amounts  to 
this :  That  the  evidence  of  the  person  present,  who  heard  the  declara- 
tions of  Holly  giving  directions  as  to  the  payment  of  the  money  he 
was  then  advancing  to  the  defendant,  was  mere  hearsay  and,  there- 
fore, not  competent.  Had  the  plaintiff  sued  Holly  for  this  sum  of 
money  no  objection  to  the  competency  of  this  evidence  would  have 
been  thought  of;  and  if  the  defendant  had  performed  his  promise 
by  paying  the  sum  loaned  to  him  to  the  plaintiff,  and  Holly  had  after- 
ward sued  him  for  its  recovery,  and  this  evidence  had  been  offered 
by  the  defendant,  it  would  doubtless  have  been  received  witliout  an 

2  The  statementof  fact.s  and  clLssenting  opinion  of  Conistock,  J.,  are  oiiiiltt'd. 


316  OPERATION   OF  CONTRACT 

objection  from  any  source.  All  the  defendant  had  the  right  to  de- 
mand in  this  case  was  evidence  which,  as  between  Holly  and  the 
plaintiff,  was  competent  to  establish  the  relation  between  them  of 
debtor  and  creditor.  For  that  purpose  the  evidence  was  clearly  com- 
petent; it  covered  the  whole  ground  and  warranted  the  verdict  of 
the   jury. 

But  it  is  claimed  that  notwithstanding  this  promise  was  estab- 
lished by  competent  evidence,  it  was  void  for  the  want  of  considera- 
tion. It  is  now  more  than  a  quarter  of  a  century  since  it  was  settled 
by  the  supreme  court  of  this  state — in  an  able  and  painstaking  opinion 
by  the  late  Chief  Justice  Savage,  in  which  the  authorities  were  fully 
examined  and  carefully  analyzed — that  a  promise  in  all  material  re- 
spects like  the  one  under  consideration  was  valid ;  and  the  judgment 
of  that  court  was  unanimously  affirmed  by  the  court  for  the  correc- 
tion of  errors.  Farley  v.  Cleaveland,  4  Cow.  432,  15  Am.  Dec.  387; 
s.  c.  in  error,  9  Cow.  639.  In  that  case  one  ISloon  owed  Farley  and 
sold  to  Cleaveland  a  quantity  of  hay,  in  consideration  of  which 
Cleaveland  promised  to  pay  Moon's  debt  to  Farley ;  and  the  decision 
in  favor  of  Farley's  right  to  recover  was  placed  upon  the  ground  that 
the  hay  received  by  Cleaveland  from  Moon  was  a  valid  consideration 
for  Cleaveland's  promise  to  pay  Farley,  and  that  the  subsisting  lia- 
bility of  Moon  to  pay  Farley  was  no  objection  to  the  recovery.  The 
fact  that  the  money  advanced  by  Holly  to  the  defendant  was  a  loan 
to  him  for  a  day,  and  that  it  thereby  became  the  property  of  the  de- 
fendant, seemed  to  impress  the  defendant's  counsel  with  the  idea  that 
because  the  defendant's  promise  was  not  a  trust  fund  placed  by  the 
plaintiff  in  the  defendant's  hands,  out  of  which  he  was  to  realize 
money  as  from  the  sale  of  a  chattel  or  the  collection  of  a  debt,  the 
promise  although  made  for  the  benefit  of  the  plaintiff  could  not  in- 
ure to  his  benefit.  The  hay  which  Cleaveland  delivered  to  Moon  was 
not  to  be  paid  to  Farley,  but  the  debt  incurred  by  Cleaveland  for  the 
purchase  of  the  hay,  like  the  debt  incurred  by  the  defendant  for 
money  borrowed,  was  what  was  to  be  paid. 

That  case  has  been  often  referred  to  by  the  courts  of  this  state, 
and  has  never  been  doubted  as  sound  authority  for  the  principle  up- 
held! by  it.  Barker  v.  Bucklin,  2  Denio,  45,  43  Am.  Dec.  726 ;  Canal 
Co.  V.  Westchester  County  Bank,  4  Denio,  97.  It  puts  to  rest  the 
objection  that  the  defendant's  promise  was  void  for  want  of  consider- 
ation. The  report  of  that  case  shows  that  the  promise  was  not  only 
made  to  Moon  but  to  the  plaintiff  Farley.  In  this  case  the  promise 
was  made  to  Holly  and  not  expressly  to  the  plaintiff;  and  this  dif- 
ference between  the  two  cases  presents  the  question,  raised  by  the 
defendant's  objection,  as  to  the  want  of  privity  between  the  plain- 
tiff and  defendant.  As  early  as  1806  it  was  announced  by  the  su- 
preme court  of  this  state,  upon  what  was  then  regarded  as  the  set- 
tled law  of  England,  "That  where  one  person  makes  a  promise  to 
another  for  the  benefit  of  a  third  person,  that  third  person  may  main- 


LIMITS   OF   CONTRACTUAL  EELATION  317 

tain  an  action  upon  it."  Schermerhorn  v.  Vanderheyden,  1  Johns. 
140,  3  Am.  Dec.  304,  has  often  been  reasserted  by  our  courts  and 
never  departed  from. 

The  case  of  Seaman  v.  White  has  occasionally  been  referred  to 
(but  not  by  the  courts)  not  only  as  having  some  bearing  upon  the 
question  now  under  consideration,  but  as  involving  in  doubt  the  sound- 
ness of  the  proposition  stated  in  Schermerhorn  v.  Vanderheyden.  In 
that  case  one  Hill,  on  the  17th  of  August,  1835,  made  his  note  and 
procured  it  to  be  indorsed  by  Seaman  and  discounted  by  the  Phoenix 
Bank.  Before  the  note  matured  andl  while  it  was  owned  by  the 
Phoenix  Bank,  Hill  placed  in  the  hands  of  the  defendant,  Whitney, 
his  draft  accepted  by  a  third  party,  which  the  defendant  indorsed, 
andl  on  the  7th  of  October,  1835,  got  discounted  and  placed  the  avails 
in  the  hands  of  an  agent  with  which  to  take  up  Hill's  note;  the  note 
became  due,  Whitney  withdrew  the  avails  of  the  draft  from  the 
hands  of  his  agent  and  appropriated  it  to  a  debt  due  him  from  Hill, 
and  Seaman  paid  the  note  indorsed  by  him  and  brought  his  suit 
against  Whitney.  Upon  this  state  of  facts  appearing,  it  was  held  that 
Seaman  could  not  recover :  first,  for  the  reason  that  no  promise  had 
been  made  by  Whitney  to  pay,  and  second,  if  a  promise  could  be  im- 
plied from  the  facts  that  Hill's  accepted  draft,  with  which  to  raise 
the  means  to  pay  the  note,  had  been  placed  by  Hill  in  the  hands  of 
\\Tiitney,  the  promise  would  not  be  to  Seaman,  but  to  the  Phoenix 
Bank  who  then  owned  the  note ;  although  in  the  course  of  the  opin- 
ion of  the  court,  it  was  stated  that,  in  all  cases  the  principle  of  which 
was  sought  to  be  applied  to  that  case,  the  fund  had  been  appropriated 
by  an  express  undertaking  of  the  defendant  with  the  creditor.  But 
before  concluding  the  opinion  of  the  court  in  this  case,  the  learned 
judge  who  delivered  it  conceded  that  an  undertaking  to  pay  the  cred- 
itor may  be  implied  from  an  arrangement  to  that  effect  between  the 
defendant  and  the  debtor. 

This  question  was  subsequently,  and  in  a  case  quite  recent,  again 
the  subject  of  consideration  by  the  supreme  court,  when  it  was  held, 
that  in  declaring  upon  a  promise,  made  to  the  debtor  by  a  third 
party  to  pay  the  creditor  of  the  debtor,  founded  upon  a  consideration 
advanced  by  the  debtor,  it  was  unnecessary  to  aver  a  promise  to  the 
creditor;  for  the  reason  that  upon  proof  of  a  promise  made  to  the 
debtor  to  pay  the  creditor,  a  promise  to  the  creditor  would  be  implied). 
And  in  support  of  this  proposition,  in  no  respect  distinguishable  from 
the  one  now  under  consideration,  the  case  of  Schermerhorn  v.  Van- 
derheyden, with  many  intermediate  cases  in  our  courts,  were  cited, 
in  which  the  doctrine  of  that  case  was  not  only  approved  but  af- 
firmed.    Canal  Co.  v.  Westchester  County  Bank,  4  Denio,  97. 

The  same  principle  is  adjudged  in  several  cases  in  Massachusetts 
I  will  refer  to  but  few  of  them.  Arnold  v.  Lyman,  17  Mass.  400,  9 
Am.  Dec.  154;  Hall  v.  Marston,  17  Mass.  575;  Brewer  v.  Dyer,  7 
Gush.  (Mass.)  337,  340.    In  Hall  v.  Marston  the  court  say:   "It  seems 


318  OPEEATION  OF  CONTRACT 

to  have  been  well  settled  that  if  A.  promises  B.  for  a  valuable  con- 
sideration to  pay  C,  the  latter  may  maintain  assumpsit  for  the  mon- 
ey;" and  in  Brewer  v.  Dyer,  the  recovery  was  upheld,  as  the  court 
said,  "upon  the  principle  of  law  long  recognized  and  clearly  estab- 
lished, that  when  one  person,  for  a  valuable  consideration,  engages 
with  another,  by  a  simple  contract,  to  do  some  act  for  the  benefit  of 
a  third,  the  latter,  who  would  enjoy  the  benefit  of  the  act,  may  main- 
tain an  action  for  the  breach  of  such  engagement;  that  it  does  not 
rest  upon  the  ground  of  any  actual  or  supposed  relationship  between 
the  parties  as  some  of  the  earlier  cases  would  seem  to  indicate,  but 
upon  the  broader  and  more  satisfactory  basis,  that  the  law  operating 
on  the  act  of  the  parties  creates  the  duty,  establishes  a  privity,  and 
implies  the  promise  and!  obligation  on  which  the  action  is  founded." 

There  is  a  more  recent  case  decided  by  the  same  court,  to  which 
the  defendant  has  referred  and  claims  that  it  at  least  impairs  the 
force  of  the  former  cases  as  authority.  It  is  the  case  of  Mellen  v. 
Whipple,  1  Gray  (Mass.)  317.  In  that  case  one  Rollins  made  his  note 
for  $500,  payable  to  Ellis  and  Mayo,  or  order,  and  to  secure  its  pay- 
ment mortgaged  to  the  payees  a  certain  lot  of  ground,  and  then  sold 
and  conveyed  the  mortgaged  premises  to  the  defendant,  by  deed  in 
which  it  was  stated  that  the  "granted  premises  were  subject  to  a  mort- 
gage for  $500,  which  mortgage,  with  the  note  for  which  it  was  given, 
the  said  Whipple  is  to  assume  and  cancel."  The  deed  thus  maae  was 
accepted  by  Whipple,  the  mortgage  was  afterward  duly  assigned,  and 
the  note  indorsed  by  Ellis  and  Mayo  to  the  plaintiff's  intestate.  After 
Whipple  received  the  deed  he  paid  to  the  mortgagees  and  their  as- 
signs the  interest  upon  the  mortgage  and  note  for  a  time,  and  upon 
refusing  to  continue  his  payments  was  sued  by  the  plaintiff  as  ad- 
ministratrix of  the  assignee  of  the  mortgage  and  note.  The  court  held 
that  the  stipulation  in  the  deed  that  Whipple  should  pay  the  mortgage 
and  note  was  a  matter  exclusively  between  the  two  parties  to  the 
deed;  that  the  sale  by  Rollins  of  the  equity  of  redemption  did  not 
lessen  the  plaintiff's  security,  and  that  as  nothing  had  been  put  into 
the  defendant's  hands  for  the  purpose  of  meeting  the  plaintiff's  claim 
on  Rollins,  there  was  no  consideration  to  support  an  express  promise, 
much  less  an  implied  one,  that  Whipple  should  pay  Mellen  the  amount 
of  the  note.  That  is  all  that  was  decided  in  that  case,  and  the  sub- 
stance of  the  reasons  assigned  for  the  decision;  and  whether  the 
case  was  rightly  disposed  of  or  not  it  has  not  in  its  facts  any  analogy 
to  the  case  before  us,  nor  do  the  reasons  assigned  for  the  decision 
bear  in  any  degree  upon  the  question  we  are  now  considering. 

But  it  is  urged  that  because  the  defendant  was  not  in  any  sense  a 
trustee  of  the  property  of  Holly  for  the  benefit  of  the  plaintiff,  the 
?aw  will  not  imply  a  promise.  I  agree  that  many  of  the  cases  where 
a  promise  was  implied  were  cases  of  trusts,  created  for  the  benefit 
of  the  promisor.  The  case  of  Felton  v.  Dickinson,  10  Mass.  287,  and 
others  that  might  be  cited  are  of  that  class ;   but  concede  them  all  to 


LIMITS   OF  CONTRACTUAL  RELATION  319 

have  been  cases  of  trusts,  and  it  proves  nothing  against  the  apph'ca- 
tion  of  the  rule  to  this  case.  The  duty  of  the  trustee  to  pay  the  cestui 
que  trust,  according  to  the  terms  of  the  trust,  implies  his  promise  to 
the  latter  to  do  so.  In  this  case  the  defendant,  upon  ample  consider- 
ation received  from  Holly,  promised  Holly  to  pay  his  debt  to  the 
plaintiff ;  the  consideration  received  and  the  promise  to  Holly  made 
it  as  plainly  his  duty  to  pay  the  plaintiff  as  if  the  money  had  been 
remitted  to  him  for  that  purpose,  and  as  well  implied  a  promise  to 
do  so  as  if  he  had  been  made  a  trustee  of  property  to  be  converted 
into  cash  with  which  to  pay.  The  fact  that  a  breach  of  the  duty  im- 
posed in  the  one  case  may  be  visited,  and  justly,  with  more  serious 
consequences  than  in  the  other,  by  no  means  disproves  the  payment 
to  be  a  duty  in  both. 

The  principle  illustrated  by  the  example  so  frequently  quoted  (which 
concisely  states  the  case  in  hand)  "that  a  promise  made  to  one  for  the 
benefit  of  another,  he  for  whose  benefit  it  is  made  may  bring  an  ac- 
tion for  its  breach,"  has  been  applied  to  trust  cases,  not  because  it 
was  exclusively  applicable  to  those  cases,  but  because  it  was  a  prin- 
ciple of  law,  and  as  such  applicable  to  those  cases.  It  was  also  in- 
sisted that  Holly  could  have  discharged  the  defendant  from  his  prom- 
ise, though  it  was  intended  by  both  parties  for  the  benefit  of  the  plain- 
tiff, and,  therefore,  the  plaintiff  was  not  entitled  to  maintain  this  suit 
for  the  recovery  of  a  demand  over  which  he  had  no  control.  It  is 
enough  that  the  plaintiff  did  not  release  the  defendant  from  his  prom- 
ise, and  whether  he  could  or  not  is  a  question  not  now  necessarily  in- 
volved ;  but  if  it  was,  I  think  it  would  be  found  difficult  to  maintain 
the  right  of  Holly  to  discharge  a  judgment  recovered  by  the  plaintiff 
upon  confession  or  otherwise,  for  the  breach  of  the  defendant's  prom- 
ise ;  and  if  he  could  not,  how  could  he  discharge  the  suit  before 
judgment,  or  the  promise  before  suit,  made  as  it  was  for  the  plain- 
tiff's benefit  and  in  accordance  with  legal  presumption  accepted  by 
him  (Berly  v.  Taylor,  5  Hill,  577-584  et  seq.),  until  his  dissent  was 
shown  ? 

The  cases  cited  and  especially  that  of  Farley  v.  Cleaveland,  estab- 
lished the  validity  of  a  parol  promise ;  it  stands  then  upon  the  foot- 
ing of  a  written  one.  Suppose  the  defendant  had  given  his  note  in 
which  for  value  received  of  Holly,  he  had  promised  to  pay  the  plain- 
tiff and  the  plaintiff  had  accepted  the  promise,  retaining  Holly's  lia- 
bility. Very  clearly  Holly  could  not  have  discharged  that  promise,  be 
the  right  to  release  the  defendant  as  it  may.  No  one  can  doubt  that 
he  owes  the  sum  of  money  demanded  of  him,  or  that  in  accordance 
with  his  promise  it  was  his  duty  to  have  paid  it  to  the  plaintiff;  nor 
can  it  be  doubted  that  whatever  may  be  the  diversity  of  opinion  else- 
where, the  adjudications  in  this  state,  from  a  very  early  period,  ap- 
proved by  experience,  have  established  the  defendant's  liability;  if, 
therefore,  it  could  be  shown  that  a  more  strict  and  technically  accur- 
ate application  of  the  rules  ai)plicd,  would  lead  to  a  different  result 


320  OPERATION   OF   CONTRACT 

(which  I  by  no  means  concede),  the  effort  should  not  be  made  in  the 
face  of  manifest  justice.    The  judgment  should  be  affirmed. 

Johnson,  C.  J.,  and  Denio,  J.,  based  their  judgment  upon  the 
ground  that  the  promise  was  to  be  regarded  as  made  to  the  plaintiff 
through  the  medium  of  his  agent,  whose  action  he  could  ratify  when 
it  came  to  his  knowledge,  though  taken  without  his  being  privy 
thereto. 

Com  STOCK,  J.,  and  Grover,  J.,  dissented. 

Judgment  affirmed. 


II.  Assignment  of  Contracts* 

1.  By  Voluntary  Act  of  the  Parties 

(A)  Assig.nment  of  Liabilities 


ARKANSAS  VALLEY  SMELTING  CO.  v.  BELDEN  MIN.  CO. 

(Supreme  Court  of  the  United  States.  1888.     127  U.  S.  379,  8  Sup.  Ct 
1308,  32  L.  Ed.  246.) 

This  was  an  action  brought  by  a  smelting  company,  incorporated 
by  the  laws  of  Missouri,  against  a  mining  company,  incorporated  by 
the  laws  of  Maine,  and  both  doing  business  in  Colorado  by  virtue  of 
a  compliance  with  its  laws,  to  recover  damages  for  the  breach  of  a 
contract  to  deliver  ore,  made  by  the  defendant  with  Billing  &  Eilers, 
and  assigned  to  the  plaintiff.  The  material  allegations  of  the  complaint 
were  as  follows:  On  July  12,  1881,  a  contract  in  writing  was  made 
between  the  defendant  of  the  first  part  and  Billing  &  Eilers  of  the 
second  part,  by  which  it  was  agreed  that  the  defendant  should  sell 
and  deliver  to  Billing  &  Eilers,  at  their  smelting  works  in  Leadville, 
10,000  tons  of  carbonate  lead  ore  from  its  mines  at  Red  Cliff,  at  the 
rate  of  at  least  50  tons  a  day,  beginning  upon  the  completion  of  a  rail- 
road from  Leadville  to  Red  Cliff,  and  continuing  until  the  whole 
should  have  been  delivered,  and  that  "all  ore  so  delivered  shall  at 
once,  upon  the  delivery  thereof,  become  the  property  of  the  second 
party;"  and  it  was  further  agreed  as  follows:  "The  value  of  said 
ore  and  the  price  to  be  paid  therefor  shall  be  fixed  in  lots  of  about  one 
hundred  tons  each ;  that  is  to  say,  as  soon  as  such  a  lot  of  ore  shall 
have  been  delivered  to  said  second  party,  it  shall  be  sampled  at  the 
works  of  said  second  party,  and  the  sample  assayed  by  either  or  both 
of  the  parties  hereto,  and  the  value  of  such  lots  of  ore  shall  be  fixed 
by  such  assay;    in  case  the  parties  hereto  cannot  agree  as  to  such 

3  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  194- 
197,  199.  200. 


ASSIGNMENT   OF   CONTRACTS  321 

assay,  they  shall  agree  upon  some  third  disinterested  and  competent 
party,  whose  assay  shall  be  final.  The  price  to  be  paid  by  said  sec- 
ond party  for  such  lot  of  ore  shall  be  fixed  on  the  basis  hereinafter 
agreed  upon  by  the  closing  New  York  quotations  for  silver  and  com- 
mon lead,  on  the  day  of  the  delivery  of  sample  bottle,  and  so  on  until 
all^  of  said  ore  shall  have  been  delivered.  Said  second  party  shall  pay 
said  first  party  at  said  Leadville  for  each  such  lot  of  ore  at  once, 
upon  the  determination  of  its  assay  value,  at  the  following  prices;" 
specifying,  by  reference  to  the  New  York  quotations,  the  price  to 
be  paid  per  pound  for  the  lead  contained  in  the  ore,  and  the  price 
to  be  paid  for  the  silver  contained  in  each  ton  of  ore,  varying  accord- 
ing to  the  proportions  of  silica  and  of  iron  in  the  ore. 

The  complaint  further  alleged  that  the  railroad  was  completed  on 
November  30,  1881,  and  thereupon  the  defendant,  under  and  in  com- 
pliance with  the  contract,  began  to  deliver  ore  to  Billing  &  Eilers  at 
their  smelting  works,  and  delivered  167  tons  between  that  date  and 
January  1,  1882,  when  "the  said  firm  of  Billing  and  Eilers  was  dis- 
solved, and  the  said  contract  and  the  business  of  said  firm,  and  the 
smelting  works  at  which  said  ores  were  to  be  delivered,  were  sold, 
assigned,  and  transferred  to  G.  Billing,  whereof  the  defendant  had 
due  notice;"  that  after  such  transfer  and  assignment  the  defendant 
continued  to  deliver  ore  under  the  contract,  and  between  January  1 
and  April  21,  1882,  delivered  to  Billing  at  saidi  smelting  works  894 
tons;  that  on  May  1,  1882,  the  contract,  together  with  the  smelting 
works,  was  sold  and  conveyed  by  Billing  to  the  plaintiflF,  whereof  the 
defendant  had  due  notice;  that  the  defendant  then  ceased  to  deliver 
ore  under  the  contract,  and  afterwards  refused  to  perform  the  con- 
tract, and  gave  notice  to  the  plaintiff  that  it  considered  the  contract 
canceled  and  annulled ;  that  all  the  ore  so  delivered  under  the  con- 
tract was  paid  for  according  to  its  terms;  that  "the  plaintiff  and 
its  said  assignors  were  at  all  times  during  their  respective  ownerships 
ready,  able,  and  willing  to  pay  on  the  like  terms  for  each  lot  as  de- 
livered, when  and  as  the  defendant  should  deliver  the  same,  accord- 
ing to  the  terms  of  said  contract,  and  the  time  of  payment  was  fixed 
on  the  day  of  delivery  of  the  'sample  bottle,'  by  which  expression  was, 
by  the  custom  of  the  trade,  intended  the  completion  of  the  assay 
or  lest  by  which  the  value  of  the  ore  was  definitely  fixed ;"  and  that 
"the  said  Billing  and  Eilers,  and  the  said  G.  Billing,  their  successor 
and  assignee,  at  all  times  since  the  delivery  of  said  contract,  and  dur- 
ing the  respective  periods  when  it  was  held  by  them  respectively, 
were  able,  ready,  and  willing  to  and  did  comply  with  and  perform  all 
the  terms  of  the  same,  so  far  as  they  were  by  said  contract  required; 
and  the  said  plaintiff  has  been  at  all  times  able,  ready,  and  willing  to 
perform  and  comply  with  the  terms  thereof,  and  has  from  tirpe  to 
time,  since  the  said  contract  was  assigned  to  it,  so  notified  the  de- 
fendant." 

TmtocjLu.CoNT. — 21 


322  OPEEATION  OF  CONTRACT 

The  defendant  demurred  to  the  complaint  for  various  reasons,  one 
of  which  was  that  the  contract  therein  set  forth  could  not  be  assigned, 
but  was  personal  in  its  nature,  and  could  not,  by  the  pretended  as- 
signment thereof  to  the  plaintiff,  vest  the  plaintiff  with  any  power 
to  sue  the  defendant  for  the  alleged  breach  of  contract.  The  circuit ' 
court  sustained  the  demurrer,  and  gave  judgment  for  the  defendant; 
and  the  plaintiff  sued  out  this  writ  of  error. 

Mr.  Justice  Gray,  after  stating  the  facts  as  above,  delivered  the 
opinion  of  the  court. 

If  the  assignment  to  the  plaintiff  of  the  contract  sued  on  was  valid, 
the  plaintiff  is  the  real  party  in  interest,  and  as  such  entitled,  under 
the  practice  in  Colorado,  to  maintain  this  action  in  its  own  name. 
Rev.  St.  §  914;  Code  Civ.  Proc.  Colo.  §  3;  Steel  Co.  v.  Lundberg, 
121  U.  S.  451,  7  Sup.  Ct.  958,  30  L.  Ed.  982.  The  vital  question  in 
the  case,  therefore,  is  whether  the  contract  between  the  defendant 
and  Billing  &  Eilers  was  assignable  by  the  latter,  under  the  circum- 
stances stated  in  the  complaint.  At  the  present  day,  no  doubt,  an 
agreement  to  pay  money,  or  to  deliver  goods,  may  be  assigned  by  the 
person  to  whom  the  money  is  to  be  paid  or  the  goods  are  to  be  de- 
livered, if  there  is  nothing  in  the  terms  of  the  contract,  whether  by 
requiring  something  to  be  afterwards  done  by  him,  or  by  some  other 
stipulation,  which  manifests  the  intention  of  the  parties  that  it  shall 
not  be  assignable.  But  every  one  has  a  right  to  select  andl  determine 
with  whom  he  will  contract,  and  cannot  have  another  person  thrust 
upon  him  without  his  consent.  In  the  familiar  phrase  of  Lord  Den- 
man,  "You  have  the  right  to  the  benefit  you  anticipate  from  the  char- 
acter, credit,  and  substance  of  the  party  with  whom  you  contract." 
Humble  v.  Hunter,  12  Q.  B.  310,  317;  Winchester  v.  Howard,  97 
Mass.  303,  305,  93  Am.  Dec.  93;  Ice  Co.  v.  Potter,  123  Mass.  28,  25 
Am.  Rep.  9;  King  v.  Batterson,  13  R.  I.  117,  120,  43  Am.  Rep.  13; 
Lansden  v.  McCarthy,  45  Mo.  106. 

The  rule  upon  this  subject,  as  applicable  to  the  case  at  bar,  is  well 
expressed  in  a  recent  English  treatise :  "Rights  arising  out  of  con- 
tract cannot  be  transferred  if  they  are  coupled  with  liabilities,  or 
if  they  involve  a  relation  of  personal  confidence  such  that  the  party 
whose  agreement  conferred  those  rights  must  have  intended  them  to 
be  exercised  only  by  him  in  whom  he  actually  confided."  Pol.  Cont. 
(4th  Ed.)  425.  The  contract  here  sued  on  was  one  by  which  the  de- 
fendant agreed  to  deliver  10,000  tons  of  lead  ore  from  its  mines  to 
Billing  &  Eilers  at  their  smelting  works.  The  ore  was  to  be  delivered 
at  the  rate  of  50  tons  a  day,  and  it  was  expressly  agreed  that  it  should 
become  the  property  of  Billing  &  Eilers  as  soon  as  delivered.  The 
price  was  not  fixed  by  the  contract,  or  payable  upon  the  delivery  of 
the  ore.  But,  as  often  as  a  hundred  tons  of  ore  had  been  delivered, 
the  ore  was  to  be  assayed  by  the  parties  or  one  of  them,  and,  if  they 
could  not  agree,  by  an  umpire;  and  it  was  only  after  all  this  had 
been  done,  and  according  to  the  result  of  the  assay,  and  the  proper- 


ASSIGNMENT   OF   CONTRACTS  323 

tions  of  lead,  silver,  silica,  and  iron  thereby  proved  to  be  in  the  ore, 
that  the  price  was  to  be  ascertained  and  paid.  During  the  time  that 
must  elapse  between  the  delivery  of  the  ore  and  the  ascertainment  and 
payment  of  the  price  the  defendant  had  no  security  for  its  payment, 
except  in  the  character  and  solvency  of  Billing  &  Eilers. 

The  defendant,  therefore,  could  not  be  compelled  to  accept  the  lia- 
bility of  any  other  person  or  corporation  as  a  substitute  for  the  lia- 
bility of  those  with  whom  it  had  contracted.  The  fact  that  upon  the 
dissolution  of  the  firm  of  Billing  &  Eilers,  and  the  transfer  by  Eilers 
to  Billing  of  this  contract,  together  with  the  smelting  works  and  busi- 
ness of  the  partnership,  the  defendant  continued  to  deliver  ore  to  Bil- 
ling according  to  the  contract,  did  not  oblige  the  defendant  to  deliver 
ore  to  a  stranger,  to  whom  Billing  had  undertaken,  without  the  de- 
fendant's consent,  to  assign  the  contract.  The  change  in  a  partner- 
ship by  the  coming  in  or  the  withdrawal  of  a  partner  might  perhaps 
be  held  to  be  within  the  contemplation  of  the  parties  originally  con- 
tracting ;  but,  however  that  may  be,  an  assent  to  such  a  change  in  the 
one  party  cannot  estop  the  other  to  deny  the  validity  of  a  subsequent 
assignment  of  the  whole  contract  to  a  stranger. 

The  technical  rule  of  law,  recognized  in  Murray  v.  Harway,  56 
N.  Y.  Z2>7,  cited  for  the  plaintiff,  by  w^iich  a  lessee's  express  cove- 
nant not  to  assign  has  been  held  to  be  wholly  determined  by  one  as- 
signment with  the  lessor's  consent,  has  no  application  to  this  case. 
The  cause  of  action  set  forth  in  the  complaint  is  not  for  any  failure 
to  deliver  ore  to  Billing  before  his  assignment  to  the  plaintiff,  (which 
might  perhaps  be  an  assignable  chose  in  action,)  but  it  is  for  a  refusal 
to  deliver  ore  to  the  plaintiff  since  this  assignment.  Performance  and 
readiness  to  perform  by  the  plaintiff  and  its  assignors,  during  the 
periods  for  which  they  respectively  held  the  contract,  is  all  that  is  al- 
leged; there  is  no  allegation  that  Billing  is  ready  to  pay  for  any  ore 
delivered  to  the  plaintiff.  In  short,  the  plaintiff  undertakes  to  step 
into  the  shoes  of  Billing,  and  to  substitute  its  liability  for  his  The 
defendant  had  a  perfect  right  to  decline  to  assent  to  this,  and  to  re- 
fuse to  recognize  a  party,  with  whom  it  had  never  contracted,  as  en- 
titled to  demand  further  deliveries  of  ore. 

The  cases  cited  in  the  careful  brief  of  the  plaintiff's  counsel,  as 
tending  to  support  this  action,  are  distinguishable  from  the  case  at 
bar,  and  the  principal  ones  may  be  classified  as  follows: 

First.  Cases  of  agreements  to  sell  and  deliver  goods  for  a  fixed 
price,  payable  in  cash  on  delivery,  in  which  the  owner  would  receive 
the  price  at  the  time  of  parting  with  his  property,  nothing  further 
would  remain  to  be  done  by  the  purchaser,  and  the  rights  of  the  seller 
could  not  be  affected  by  the  question  whether  the  price  was  paid  by 
the  person  with  whom  he  originally  contracted  or  by  an  assignee. 
Sears  v.  Conover.  *42  N.  Y.  113,  4  Abb.  Dec.  179;  Tyler  v.  Bar- 
rows. 6  Rob.  CN.  Y.^  104. 


324  OPERATION  OF  CONTEACT 

Second.  Cases  upon  the  question  how  far  executors  succeed  to  rights 
and  HabiUties  under  a  contract  of  their  testator.  Hambly  v.  Trott, 
Cowp.  371,  375;  Wentworth  v.  Cock,  10  Adol.  &  E.  42,  2  Perry  & 
D.  251 ;  3  Williams,  Ex'rs  (7th  Ed.)  1723-1725.  Assignment  by  oper- 
ation of  law,  as  in  the  case  of  an  executor,  is  quite  different  from  as- 
signment by  act  of  the  party ;  and  the  one  might  be  held  to  have  been 
in  the  contemplation  of  the  parties  to  this  contract,  although  the  other 
was  not.  A  lease,  for  instance,  even  if  containing  an  express  cove- 
nant against  assignment  by  the  lessee,'  passes  to  his  executor.  And 
it  is  by  no  means  clear  that  an  executor  would  be  bound  to  perform, 
or  would  be  entitled  to  the  benefit  of,  such  a  contract  as  that  now  in 
question.    Dickinson  v.  Calahan,  19  Pa.  227. 

Third.  Cases  of  assignments  by  contractors  for  public  works,  in 
which  the  contracts,  and  the  statutes  under  which  they  were  made, 
were  held  to  permit  all  persons  to  bid  for  the  contracts,  and  to  ex- 
ecute them  through  third  persons.  Taylor  v.  Palmer,  31  Cal.  240, 
247 ;  St.  Louis  v.  Clemens,  42  Mo.  69 ;  Philadelphia  v.  Lockhardt,  73 
Pa.  211 ;  Devlin  v.  New  York,  63  N.  Y.  8. 

Fourth.  Other  cases  of  contracts  assigned  by  the  party  who  was 
to  do  certain  work,  not  by  the  party  who  was  to  pay  for  it,  and  in 
which  the  question  was  whether  the  work  was  of  such  a  nature  that 
it  was  intended  to  be  performed  by  the  original  contractor  only.  Rob- 
son  V.  Drummond,  2  Barn.  &  Adol.  303 ;  Waggon  Co.  v.  Lea,  5  Q. 
B.  Div.  149 ;   Parsons  v.  Woodward,  22  N.  J.  Law,  196. 

Without  considering  whether  all  the  cases  cited  were  well  decided, 
it  is  sufficient  to  say  that  none  of  them  can  control  the  decision  of  the 
present  case.    Judgment  affirmed. 


(B)  Assignment  of  Rights 
(a)  General  Rule 


COOLIDGE  V.  RUGGLES. 
(Supreme  Judicial   Court  of   Massachusetts.   1S19.     15   Mass.   387.) 

Assumpsit  on  the  following  writing,  viz. : 

"Boston,  October  1,  1812. 

"For  value  received,  I  promise  to  pay  the  bearer  hereof,  six  months 
after  date,  nine  hundred  and  eighty  dollars,  provided  the  ship  Mary 
arrives  at  a  European  port  of  discharge,  free  from  capture  and  con- 
demnation by  the  British.  Samuel  Ruggles." 

At  the  trial  before  Jackson,  J.,  at  the  sittings  here,  after  the  last 
March  term,  it  appeared  that  the  said  promise  was  made  to  one  W.  S. 
Skinner,  the  consideration  whereof  was  a  certain  document,  known  by 


ASSIGNMENT   OF   CONTRACTS  325 

the  name  of  "a  Sawyer  license,"  which  was  intended  for  the  protection 
of  merchant  vessels  of  the  United  States  from  capture  by  British 
cruisers,  war  then  existing  between  the  United  States  and  Great 
Britain;  and  that,  about  two  years  after  receiving  the  said  note,  the 
said  Skinner  transferred  and  delivered  the  same,  with  other  effects, 
to  the  plaintiff,  to  be  by  him  collected  and  passed  to  the  credit  of 
Skinner,  in  an  account  then  open  between  him  and  the  plaintiff,  and 
upon  which  Skinner  was  indebted  to  the  plaintiff.  The  signature  of 
the  defendant  was  admitted,  and  the  plaintiff  proved  that  the  said  ship 
Mary,  mentioned  in  the  said  note,  arrived  at  a  European  port  of  dis- 
charge, and  there  delivered  her  cargo  in  safety,  without  any  capture  or 
condemnation  whatsoever. 

A  verdict  was  returned  for  the  plaintiff,  under  the  direction  of  the 
judge ;  and  the  defendant  tendered  a  bill  of  exceptions  as  at  common 
law,  which  was  sealed  by  the  judge.  The  question  chiefly  insisted  on 
at  the  argument,  and  which  alone  was  considered  by  the  court,  was, 
whether  the  plaintiff  could  maintain  the  action,  as  assignee  of  the  note 
sued. 

Parker,  C.  J.,  delivered  the  opinion  of  the  court. 

The  only  question  to  which  we  have  turned  our  attention  in  this 
case,  is,  whether  the  written  promise  declared  on  is  negotiable  in  its 
nature,  so  that  an  action  may  be  maintained  upon  it  in  the  name  of 
the  plaintiff,  who  is  assignee.  And  we  are  all  of  opinion  that  it  is  not 
so  negotiable,  on  account  of  the  contingency  on  which  the  payment 
of  the  money  is  made  to  depend. 

All  promises  to  pay  money,  being  at  common  law  choses  in  action, 
were  unassignable.  It  is  only  by  virtue  of  the  statute  of  3  &  4  Anne, 
c.  9,  that  certain  descriptions  of  them  are  assignable,  so  as  that  the 
property  and  the  right  of  action  vest  in  the  assignee. 

The  paper  declared  on  does  not  come  within  the  description  of  notes 
made  assignable  by  that  statute.  For  it  has  been  declared  by  frequent 
judicial  decisions,  that  a  note  or  bill,  to  attain  that  character,  must 
be  payable  in  money  absolutely.  A  note  or  bill  payable  to  bearer 
stands  upon  the  same  ground  as  a  note  payable  to  order.  The  only 
difference  is  in  the  mode  of  transfer.  The  latter  must  be  by  indorse- 
ment ;  the  former  may  be  by  delivery ;  but  both  must  contain  a  prom- 
ise to  pay  money  unconditionally. 

The  cases  which  show  that  an  action  may  be  maintained  by  an  as- 
signee, in  his  own  name,  are  all  where  there  has  been,  after  the  assign- 
ment, a  promise  to  pay  to  the  assignee ;  and  to  this  effect  the  case  of 
Fenner  v.  Mears,  2  W.  Bl.  1269,  is  unquestionably  good  law  ;  and 
several  cases  have  been  decided  by  this  court  upon  the  same  principle. 
In  this  case,  no  promise  is  shown  to  pay  to  the  assignee. 

Cases  were  cited  to  show  that  the  promise  in  this  case  is  assignal)le 
in  equity.  But  the  difference  between  that,  and  an  assignment  under 
the  statute  of  Anne,  is  too  well  known  to  need  explanation.  The  ver- 
dict is  set  aside  and  a  new  trial  granted. 


326  OPERATION   OF   CONTSAOT 


(b)  Exceptions 


CARTER  &  MOORE  \.  UNITED  INS.  CO.  OF  NEW  YORK. 

(Court  of  Chaucery  of  New  York,  1815.     1  Johns.  Ch.  463.) 

The  bill  was  filed  by  the  plaintiffs,  as  assignees  of  a  policy  of  in- 
surance, underwritten  by  the  defendants,  for  William  Titus  and 
George  Gibbs,  on  which  the  plaintiffs  claimed  payment  for  a  total  loss. 
The  insurance  was  on  500  barrels  of  flour  from  Newport  to  St.  Jago 
de  Cuba,  on  board  the  Spanish  brig  Patriota,  which  was  captured  by 
a  Carthagena  privateer.  On  the  21st  of  December,  1814,  the  policy 
was  assigned  by  Titus  &  Gibbs  to  the  plaintiffs,  in  trust,  for  them- 
selves and  other  creditors  of  Titus  &  Gibbs.  The  bill  charged  that 
the  defendants  refused  to  pay  the  loss,  alleging,  among  other  things, 
that  the  plaintiffs  had  no  title  to  the  property  insured,  which,  in  fact, 
belonged  to  one  J.,  a  Spaniard,  and  not  to  Titus  &  Gibbs.  The  bill 
prayed  that  the  defendants  might  answer  the  matter  charged  in  the 
bill,  and  be  compelled  to  pay  the  plaintiffs  the  amount  insured,  as  for 
a  total  loss. 

To  this  bill  the  defendants  demurred  on  the  following  grounds : 
that  it  appeared  by  the  bill  that  the  plaintiffs'  demand,  or  cause  of  ac- 
tion, was  properly  cognizable  in  a  court  of  law ;  as  it  is  not  alleged 
that  Titus  &  Gibbs  refused  to  let  the  plaintiffs  make  use  of  their 
names,  in  a  suit  at  law;  or  that  they  are,  in  any  way,  hindered  from 
prosecuting  at  law ;  or  that  they  stood  in  need  of  any  discovery  to 
aid  them  in  such  action. 

Kent,  Ch.  The  demand  is  properly  cognizable  at  law,  and  there  is 
no  good  reason  for  coming  into  this  court  to  recover  on  the  contract 
of  insurance.  The  plaintiffs  are  entitled  to  make  use  of  the  names  of 
Gibbs  &  Titus,  the  original  assured,  in  the  suit  at  law ;  and  the  nom- 
inal plaintiffs  would  not  be  permitted  to  defeat  or  prejudice  the  right 
of  action.  It  may  be  said  here,  as  was  said  by  the  chancellor,  in 
the  analogous  case  of  Dhegetoft  v.  The  London  Assurance  Company, 
Mosely,  83,  that,  at  this  rate,  all  policies  of  insurance  would  be  tried 
in  this  court.  In  that  case  the  policy  stood  in  the  name  of  a  nominal 
trustee;  but  that  was  not  deemed  sufficient  to  change  the  jurisdiction; 
and  the  demurrer  to  the  bill  was  allowed,  and  the  decree  was  after- 
wards afifirmed  in  parliament.    3  Bro.  P.  C.  525. 

The  bill,  in  this  case,  states  no  special  ground  for  equitable  relief; 
nor  is  any  discovery  sought  which  requires  an  answer.  Bill  dismissed, 
with  costs. 


ASSIGNMENT   OF   CONTRACTS  327 

ALLEN  V.  BROWN. 

(Court  of  Appeals  of  New  York,  1870.     44  N.  Y.  228.) 

Brown,  the  defendant,  was  employed  by  Cook,  Clark  and  Cary  to 
settle  a  claim  they  had  together  with  him  against  a  railroad  company. 
He  settled  the  claims  by  taking  in  payment  thereof  certain  coupon 
bonds,  one  fourth  of  which  he  delivered  to  each  of  the  other  claim- 
ants, and  also  certain  notes  which  were  afterwards  paid  and  the  pro- 
ceeds retained  by  the  defendant.  Cook,  Clark  and  Cary  assigned 
their  claims  to  Allen,  by  whom  suit  was  brought  against  the  defendant. 

A  judgment  in  favor  of  the  plaintiff  entered  upon  the  report  of  a 
referee  was  affirmed  by  the  Supreme  Court  at  General  Term,  and  de- 
fendant appeals. 

Hunt,  C*  The  appellant  insists  that  the  assignment  from  Cook, 
Clark,  and  Cary  to  the  plaintiff,  conveyed  no  title  upon  which  this  suit 
could  be  brought.  This  point  is  based  upon  the  evidence  given  by  Mr. 
Cook,  when  he  testifies,  "Allen  paid  me  nothing,  and  I  agreed  with  him 
that  I  would  take  care  of  the  case,  and  if  he  got  beat  it  should  not 
trouble  or  cost  him  anything." 

I  am  of  the  opinion  that  the  assignment  is  sufficient  to  sustain  this 
action. 

The  Code  abolishes  the  distinction  between  actions  at  law  and  suits 
in  equity,  and  between  the  forms  of  such  actions.  Section  69  (3339). 
It  is  also  provided,  in  section  111  (449),  that  every  action  must  be 
prosecuted  in  the  name  of  the  real  party  in  interest,  except  as  other- 
wise provided  in  section  113  (449).  The  latter  section  provides  that 
an  executor,  administrator,  trustee  of  an  express  trust,  may  sue  in 
his  own  name.  These  provisions  pretended  to  abolish  the  common 
law  rule,  which  prohibits  an  action  at  law  otherwise  than  in  the  name 
of  the  original  obligee  or  covenantee,  although  he  had  transferred  all 
his  interest  into  bond  or  covenant  to  another.  It  accomplishes  fully 
that  object,  although  others  than  the  assignee  may  have  an  ultimate 
beneficial  interest  in  the  recovery.  In  a  case  like  the  present,  the 
whole  title  passes  to  the  assignee,  and  he  is  legally  the  real  party  in 
interest,  although  others  may  have  a  claim  upon  him  for  a  portion  of 
the  proceeds.  The  specific  claim,  and  all  of  it,  belongs  to  him.  Even 
if  he  be  liable  to  another  as  a  debtor  upon  his  contract  for  the  collec- 
tion he  may  thus  make,  it  does  not  alter  the  case.  The  title  to  the 
specific  claim  is  his.  Durgin  v.  Ireland,  14  N.  Y.  322;  Williams  v. 
Brown,  *41  N.  Y.  486,  and  cases  cited;  Paddon  v.  Williams,  1  Rob. 
340;    s.  c,  2  Abb.  Prac.  (N.  S.)  88.     ♦     *     * 

*  The  Btateuient  of  facts  is  abridsed,  and  a  portion  of  the  opinion  of  Hunt, 
C,  and  the  concurring  opinion  of  Leonard,  C,  are  omitted. 


328  OPERATION  OF  CONTKAOT 

2.  By  Operation  of'  IvAw 
(A)  Assignment  of  Obligations  on  Transfer  of  Interests  in  Land 


GORDON  V.  GEORGE. 

(Supreme  Court  of  Indiana,  1859.    12  Ind.  408.) 

Hanna,  J.  Sarah  George,  the  appellee,  gave  a  written  lease  to  one 
Black,  stipulating  therein  that  Black  should  have  the  use  of  a  parcel 
of  land  for  five  years;  in  consideration  of  v^hich  Black  was  to  clear 
the  land  and  make  it  ready  for  the  plow,  and  leave  the  premises  in 
good  repair.  It  was  further  agreed  that  Black  should  build  a  cabin 
and  smoke-house,  and  dig  a  well  on  the  premises,  for  which  Sarah 
George  was  to  pay  twenty-five  dollars  and  thirty-seven  cents.  Before 
clearing  the  land  or  building  the  cabin,  etc.,  Black  assigned  the  lease, 
by  indorsement,  to  the  said  James  Gordon,  appellant. 

Gordon  sued  before  a  justice,  alleging  that  he  had  built  the  house 
and  smoke-house  and  dug  the  well ;  that  the  time  had  expired,  and  the 
lessor  refused  to  pay  for  said  house,  etc. 

The  plaintiff  recovered  a  judgment  before  the  justice  for  forty-two 
dollars.  On  appeal  to  the  Common  Pleas,  the  defendant  had  a  ver- 
dict and  judgment  for  twelve  dollars. 

The  defendant,  among  other  things,  set  up,  by  way  of  counter-claim, 
that  the  plaintiff  had  not  cleared  the  ground  according  to  contract,  etc. 

The  plaintiff  asked  the  court  to  instruct  the  jury,  that,  "if  the  jury 
find  the  matters  of  counter-claim  of  the  defendant  exceed  the  amount 
which  the  jury  may  find  due  the  plaintiff,  the  jury  cannot  find  against 
the  plaintiff  such  excess,"  which  was  refused.  Upon  this  ruling  of 
the  court,  the  only  point  made,  by  brief  of  counsel,  is  predicated. 

By  the  statute  (2  R.  S.  p.  120)  plaintiff  may  dismiss  his  action; 
but  by  section  365,  "In  any  case,  where  a  set-off  or  counter-claim  has 
been  presented,  which,  in  another  action,  would  entitle  the  defendant 
to  a  judgment  against  the  plaintiff,  the  defendant  shall  have  the  right 
of  proceeding  to  the  trial  of  his  claim,  without  notice,  although  the 
plaintiff  may  have  dismissed  his  action,  or  failed  to  appear." 

So,  in  Vassear  v.  Livingston,  13  N.  Y.  252,  it  is  said  that,  "a  coun- 
ter-claim must  contain  the  substance  necessary  to  sustain  an  action  on 
behalf  of  the  defendant  against  the  plaintiff,  if  the  plaintiff  had  not 
sued  the  defendant." 

In  Howland  v.  Coffin,  9  Pick.  52,  it  was  held  by  the  Supreme  Court 
of  Massachusetts,  "that  the  assignee  of  the  lessee  is  liable  to  the  as- 
signee of  the  lessor  in  an  action  of  debt  for  the  time  he  holds ;  for 
though  there  is  no  privity  of  contract,  there  is  a  privity  of  estate  which 
creates  a  debt  for  the  rent."    See  authorities  cited. 


ASSIGNMENT   OF  CONTRACTS  329 

In  another  case  between  the  same  parties,  it  is  said  (12  Pick.  125) 
"the  defendant  took  the  term  subject  to  all  the  advantages  and  dis- 
advantages attached  to  it  by  the  terms  of  the  lease.  The  covenant  for 
the  payment  of  the  rent  ran  with  the  land,  and  by  the  assignment  of 
the  term  became  binding  on  the  defendant."  See  Farmers'  Bank  v. 
Mutual  Ins.  Soc,  4  Leigh  (Va.)  69;  Taylor's  Landlord  and  Tenant, 
7(i;  Provost  v.  Calder,  2  Wend.  (N.  Y.)  517;  Verplanck  v.  Wright, 
23  Wend.  (N.  Y.)  506;  In  re  Galloway,  21  Wend.  (N.  Y.)  32,  34  Am. 
Dec.  209 ;  Vernon  v.  Smith,  5  Barn.  &  Adol.  1. 

It  resolves  itself  into  the  question,  then,  under  the  above,  and  section 
59,  p.  41,  of  the  same  statute,  and  the  authorities  cited,  whether  the 
plaintiff  was  liable  to  the  defendant  for  the  non-performance  of  the  con- 
tract of  his  assignor.  We  think,  under  the  circumstances  of  this  case, 
he  was.  He  became  the  assignee  of  the  whole  interest  of  Black,  be- 
fore any  part  of  the  contract  was  performed.  By  receiving  an  assign- 
ment of  the  lease,  and  taking  possession  of  the  land  under  it,  he  surely 
became  liable  to  perform  the  stipulations  of  that  lease,  so  far  as  they 
had  reference  to  improvements  upon  said  land,  if  no  others,  of  which 
we  do  not  decide,  as  it  is  not  necessary  to  do  so. 

The  ruling  of  the  court  upon  the  instruction  was  correct.  The  judg- 
ment is  affirmed,  with  10  per  cent,  damages  and  costs. 


(B)  Assignment  of  Contractual  Obligation  by  Marriage 


HOWARTH  V.  WARMSER  et  al. 

(Supreme   Court   of   Illinois,    1871.     58   Til.   48.) 

Action  by  Leopold  Warmser  and  Nathan  Gutner,  partners,  doing 
business  as  Warmser  &  Co.,  against  James  Howarth  and  wife  on  a 
promissory  note  given  by  the  wife  dum  sola.  Judgment  against  de- 
fendants.    Howarth  appeals."* 

Lawrence,  C.  J.  We  held  in  Connor  v.  Berry,  46  111.  370,  95 
Am.  Dec.  417,  and  McMurtry  v.  Webster,  48  111.  123,  that  the  hus- 
band was  still,  as  at  common  law,  liable  for  the  debts  of  his  wife, 
contracted  before  marriage  notwithstanding  the  act  of  1861,  because 
that  act  still  left  to  the  husband  the  wife's  earnings.  Since  those  de- 
cisions were  made,  the  legislature,  by  the  act  of  1869,  has  taken  from 
the  husband  all  control  over  the  earnings  of  his  wife,  and  thus  swept 
away  the  last  vestige  of  the  reasons  upon  which  the  common  law 
rule  rested.     The  rule  itself  must  now  cease.     Legislative  action  has 

«  Tlio  Htateriicnt  of  the  c:ise  is  abridged. 


330  OPERATION    OF   CONTRACT 

virtually  abolished  it,  by  taking  away  its  foundations  and  rendering 
its  enforcement  unjust. 

The  judgment  must  be  reversed  andl  the  cause  remanded.    Judg- 
ment reversed. 


(C)  Assignment  of  Contractual  Obligation  by  Death 


Appeal  of  BILLINGS. 
(Supreme  Court   of  Peunsylvauia,   1884.     106  Pa.   558.) 

This  was  a  bill  in  equity  filed  by  Charles  F.  Billings  and  Abbie  B. 
McNeil,  against  Sarah  M.  Billings,  Jefferson  Harrison  and  William 
Putnam,  praying  for  an  injunction  to  restrain  the  defendants  from 
committing  waste  by  cutting  timber  on  certain  lands,  and  for  an  ac- 
count of  timber  cut. 

Appeal  from  decree  dismissing  the  bill. 

Clark,  J.«  Silas  X.  Billings,  who  died  intestate,  on  the  13th  day 
of  October,  1879,  was,  at  the  time  of  his  death,  the  owner  in  fee  of 
certain  tracts  of  land,  situate  in  the  counties  of  Tioga  and  Potter, 
containing  in  the  aggregate  38,157  acres.  He  left  to  survive  him  a 
widow,  Sarah  M.  Billings,  a  brother,  Charles  F.  Billings,  and  a  sister, 
Abbie,  wife  of  P.  S.  S.  McNeil  the  brother  and  sister  named,  being 
of  the  whole  blood  and  other  brothers  and  sisters  of  the  half  blood. 

In  his  lifetime,  on  the  25th  of  September,  1879,  he  entered  into 
a  written  contract  with  Henry  Colton,  to  cut  the  pine  timber  on  about 
5,000  acres  of  the  land,  and  deliver  it  into  the  boom  at  Williamsport, 
on  certain  terms  in  the  contract  mentioned ;  on  the  same  day  in  the 
presence  of  Billings,  Colton  contracted  with  William  Putnam,  for  the 
performance  of  part  of  the  work.  About  the  first  day  of  October, 
1879,  Colton  or  Putnam,  pursuant  to  the  contract,  and  at  large  ex- 
pense, began  the  cutting  out  and  repairing  of  the  roads,  building  of 
camps,  &c.  Billings,  as  we  have  stated,  died  on  the  13th  of  October, 
1879.  Henry  Colton  also  died  on  the  10th  day  of  August,  1880,  hav- 
ing first  made  his  last  will  and  testament  in  which,  after  appointing 
Jefferson  Harrison  the  executor  thereof,  he  authorized  the  said  execu- 
tor "to  continue  the  work,  under  the  contract  made,  as  aforesaid,  with 
Silas  X.  Billings,  and  to  execute  the  said  contract  according  to  its 
true  intent  and  meaning,  as  fully  and  to  the  same  extent,  as  the  testa- 
tor could  do  if  living." 

Under  a  partition  which  was  afterwards  made  of  the  lands  of  said 
Silas  X.  Billings,  between  the  w'idow  and  heirs,  about  19,000  acres, 
including  the  lands,  the  timber  upon  which  was  the  subject  of  the 

6  The  statement  of  the  case  is  abridged  and  a  portion  of  the  opinion  omitted. 


ASSIGNMENT   OF   CONTKACTS  331 

ColtoTi  contract,  were  on  the  24th  March,  1881,  allotted  as  dower, 
and  set  apart  to  the  widow  for  life. 

The  plaintiffs  in  this  case  are  the  heirs  at  law  of  the  full  blood 
of  Silas  X.  Billings,  deceased;  the  defendants,  Sarah  M.  Billings  and 
Jefferson  Harrison,  are  the  legal  representatives  of  the  original  par- 
ties to  the  agreement  of  25th  September,  1879,  whilst  William  Put- 
nam is  the  employee  of  Harrison. 

The  bill  charges  the  commission  of  waste  in  the  removal  of^tht 
pine  timber  from  the  5,000  acres  aforesaid,  embraced  within  the 
boundary  set  apart  to  the  widow,  and  the  prayer  of  the  bill  is  for  an 
injunction,  also  for  an  account  of  the  proceeds  in  the  defendants' 
hands.  The  right  to  an  account,  however,  is  predicated  of  the  waste, 
and  it  follows  that  if  the  defendants  have  committed  no  waste,  there 
can  be  no  decree  for  an  account. 

The  plaintiffs  maintain  that  the  contract  under  which  the  defend- 
ants assume  to  act  is  personal  in  its  character;  that  it  provides  for 
the  performance  of  such  services,  and  the  exercise  of  such  personal 
skill  and  experience  upon  the  part  of  Colton,  in  the  matters  involved, 
as  necessarily  limited  its  performance  to  Colton  himself;  and,  fur- 
ther, that  the  contract  is  such  that  at  the  death  of  Billings,  its  con- 
tinuance devolved  such  duties,  and  created  such  obligations  upon  his 
legal  representatives  as  are  inconsistent  with  the  settlement  of  his 
estate ;  that,  therefore,  the  survival  of  the  contract  was  necessarily 
not  in  contemplation  of  the  parties  at  the  time  of  its  execution.  It 
is  urged,  therefore,  that  upon  the  death  of  either  party,  the  obliga- 
tion of  the  contract  ceased  as  to  both. 

It  is  certainly  true  that  the  rights  and  responsibilities  of  executors 
and  administrators  depend,  in  many  cases,  upon  the  relations  of  the 
original  parties ;  the  former  do  not,  in  all  cases,  succeed  to  the  con- 
tracts of  the  latter ;  what  may  be  termed  mere  contract,  personal  re- 
lations do  not  survive.  Where  the  agreement  is  for  services  which 
involve  the  peculiar  skill  of  an  expert,  by  whom  alone  the  particular 
work  in  contemplation  of  the  parties  can  be  performed,  or  more  gen- 
erally, where  distinctly  personal  considerations  are  at  the  foundation 
of  the  contract,  the  relation  of  the  parties  is  dissolved  by  the  death 
of  him  whose  personal  qualities  constituted  the  particular  inducement 
to  the  contract.  The  casus  must  be  such,  however,  as  to  wholly  pre- 
vent the  performance  of  the  contract ;  what  is  impossible  to  be  done 
cannot  be  required  to  be  done,  and  a  subsequent  intervening  incapacity 
will,  in  such  case,  work  a  dissolution  of  the  contract. 

But  where  a  party  agrees  to  do  that  which  does  not  necessarily  re- 
quire him  to  perform  in  person,  that  which  he  may,  by  assignment 
of  his  contract  or  otherwise,  employ  others  to  do,  we  may  fairly  in- 
fer, unless  otherwise  expressed,  that  a  mere  personal  relation  was 
not  contemplated.  It  is  true  also,  perhaps,  that  a  contract  may  in- 
volve matters  of  such  a  nature  as  to  render  the  performance  of  them 
so  incompatible  with  the  settlement  of  a  decedent's  estate,  and  so  in- 


332  OPERATION  OF  CONTKAOT 

consistent  with  the  general  duties  of  an  administrator  or  executor 
that,  in  the  absence  of  any  express  provision  to  the  contrary,  the  par- 
ties may  be  presumed,  as  in  the  case  of  Dickinson  v.  Calahan's  Ad- 
ministrator, 19  Pa.  227,  to  have  intended  its  dissohuion  at  death. 
The  whole  question,  in  each  case,  is  one  for  construction,  and  de- 
pends upon  the  intention  of  the  parties,  that  intention  to  be  found 
under  the  rules  regulating  the  construction  of  contracts  in  general. 
Res^erting,  in  the  first  instance,  to  the  instrument  itself,  we  find  there 
an  express  provision  "that  for  the  faith/ul  performance  of  each  and 
every  the  covenants  and  agreements  aforesaid,  each  of  said  parties 
doth  bind  himself,  his  heirs,  executors  and  administrators,  to  the  oth- 
er his  heirs,  executors  and  administrators,  firmly  by  these  presents." 

In  this  respect  Dickinson  v.  Calahan's  Administrator  is  clearly  dis- 
tinguishable from  the  case  at  bar;  the  contract  there  exhibited  noth- 
ing upon  its  face  which  indicated  any  purpose  of  the  parties,  that,  in 
case  of  death,their  legal  representatives  should  succeed  to  their  rights, 
and  incur  the  obligation  of  a  full  and  continuous  performance  of  the 
contract.  We  discover  nothing  in  the  nature  of  the  obligations  as- 
sumed, or  of  the  duties  to  be  performed  on  either  side,  that  would 
tend  to  create  any  merely  personal  relation  between  the  parties,  or 
involve  such  a  performance  as  would  indicate  that  a  survival  of  the 
contract  was  not  in  contemplation;  a  contrary  intention,  however,  is 
distinctly  shown  by  the  subsequent  conduct  of  the  parties.  On  the 
same  day  on  which  the  contract  was  executed,  Colton  made  an  agree- 
ment with  Putnam  in  the  presence,  and  with  the  apparent  concurrence 
of  Billings,  by  the  terms  of  which  Putnam  agreed  to  cut  and  deliver 
the  said  timber  at  the  mouth  of  State  Run,  ready  for  floating;  Put- 
nam began  the  w^ork  on  the  1st  October,  1879,  and,  during  the  life- 
time of  Billings  and  with  his  knowledge,  built  camps,  constructed  and 
repaired  roads,  &c.,  &c.  After  Billings'  death,  and  until  the  com- 
mencement of  this  suit,  he  continued  cutting  and  stocking  the  timber 
from  year  to  year,  with  the  knowledge  of  the  plaintiffs,  and  without 
objection  on  their  part.  In  the  winter  of  1879-80  he  delivered  into 
the  boom  at  Williamsport  3,100,000  feet  of  logs;  in  the  winter  of 
1880-81,  5,412,000  feet,  and  in  the  winter  of  1881-82,  4,756,000  feet; 
it  is  estimated  that  about  2,150,000  feet  remain,  and  at  the  filing  of 
this  bill  Harrison  and  Putnam  were  proceeding  to  cut  and  deliver  this 
remaining  timber  into  the  boom  at  Williamsport,  in  accordance  with 
the  original  contract. 

The  master  finds  that  the  plaintiffs  had  a  general  knowledge  of  what 
Putnam  was  doing  upon  the  lands  from  time  to  time  as  the  work 
progressed ;  and,  that  up  to  the  bringing  of  this  suit  they  made  no  ob- 
jection, either  to  the  cutting,  transportation  or  delivery  of  the  timber 
pursuant  to  the  Colton  contract,  although  they  did  object  to  the  subse- 
quent disposition  of  the  timber,  and  of  its  proceeds.  Indeed,  it  ap- 
pears that  after  the  death  of  Colton,  at  the  instance  of  his  executor, 
various  meetings  of  the  parties  in  interest  were  held  for  consultation 


JOINT   AND   SEVEEAL   CONTRACTS 


333 


as  to  the  execution  of  the  contract.  At  one  of  these  meetings,  held 
in  September,  1880,  the  plaintiffs  were  present  and  stated  that  "they 
wished  the  Colton  contract  carried  out  as  it  read,"  and  that  on  the 
delivery  of  the  logs  at  Williamsport  in  the  boom,  they  would  determine 
as  to  what  disposition  should  be  made  of  them;  at  another  held  in 
August,  1881,  Mr,  Harrison  reported  what  had  been  done  up  to  that 
time,  and  stated  what  he  intended  to  do  in  the  ensuing  season,  all  of 
which  was  received  as  satisfactory. 

It  seems  clear,  not  only  that  Silas  X.  Billings  and  Henry  Colton, 
but  their  heirs  and  representatives,  since  their  decease,  by  their  acts 
and  acquiescence,  have  uniformly  interpreted  this  contract  as  one 
which  did  not  involve  a  merely  personal  relation.  From  the  words  of 
the  contract  itself,  therefore,  from  the  nature  of  the  subject  matter  it 
contains,  and  from  the  concurrent  acts  of  the  parties,  we  are  led  un- 
mistakably to  the  same  conclusion.     *     *     * 

The  decree  is  affirmed,  and  appeal  dismissed  at  the  cost  pf  the  ap- 


/ 


III.  Joint  and  Several  Contracts* 
\  1.  Joint  Contracts 


CITY  OF  PHILADELPHIA  v.  REEVES  &  CABOT. 

(Supreme    Court    of    Pennsylvania,    1SG5.    48    Pa.    472.) 

Thjs  was  an  action  of  covenant,  by  the  City  of  Philadelphia  against 
Samuel  J.  Reeves  and  Joseph  Cabot,  as  sureties  of  Fort  Ihrie.  After 
a  declaration  in  the  usual  form,  on  a  covenant  dated  May  9th  1859, 
between  the  plaintiff  and  defendants,  for  the  use  of  a  wharf  or  land- 
ing at  the  foot  of  Callowhill  street,  on  the  river  Delaware ;  the  de- 
fendants craved  oyer  of  the  instrument  on  which  suit  was  brought. 

The  plaintiffs  thereupon  placed  on  record  a  copy  of  the  following 
instrument : 

"Memorandum.  The  City  of  Philadelphia  demise  to  Fort  Ihrie  the 
wharf  or  landing  at  the  foot  of  Callowhill  street,  on  the  river  Dela- 
ware, and  the  pier  and  wharf  next  south  thereof,  being  the  same  prem- 
ises heretofore  called  and  known  as  the  Callowhill  Street  Ferry  and 
Landing,  for  the  term  of  three  years  from  April  25th  1859,  at  the 
annual  rent  of  twenty-three  hundred  dollars,  payable  quarterly:  the 
first  payment  to  be  made  on  the  25th  day  of  July  1859;  and  if  the 
rent  shall  remain  unpaid  on  any  day  on  which  the  same  ougl.it  to  be 
paid,  then  the  lessors  may  enter  on  tlie  premises  and  proceed,  by  dis- 

T  For  diacussion  of  principles,  see  Clark  on  Contracts  (2d  EdJ  \h  20.],  207. 


334  OPEEATION   OF   CONTRACT 

tress  and  sale  of  the  goods  there  found,  to  levy  the  rent  and  all  costs. 
The  lessee  and  his  sureties,  Joseph  Cabot  and  Samuel  J,  Reeves,  cove- 
nant with  the  lessors  to  pay  the  rent  punctually  as  above  provided  for, 
and  the  lessee  covenants  during  the  term  to  keep,  and  at  the  end 
thereof  peaceably  to  deliver  up  the  premises,  in  good  order  and  re- 
pair, reasonable  wear  and  tear  and  damage  by  accidental  fire  excepted, 
and  not  assign  this  lease  or  underlet  the  premises,  or  any  part  there- 
of.    *     *     * 

"In  witness  whereof  the  lessee  and  his  sureties  have  hereunto  set 
their  hands  and  seals,  and  the  corporate  seal  of  the  lessors  has  been 
hereunto  affixed  by  the  mayor  of  the  city  of  Philadelphia,  this  9th 
day  of  May,  A.  D.  1859,  the  said  lease  having  been  awarded  prior  to 
the  election  of  the  said  lessee  as  a  member  of  common  council. 

•'[Signed]     Fort  Ihrie.  [Seal.] 

Samuel  J.  Reeves.     [Seal.] 
Joseph  Cabot.  [Seal.] 

"Sealed  and  delivered  in  the  presence  of  E.  B.  McDowell. 
"[Seal]  Alexander  Henry, 

"Mayor  of  Philadelphia." 

This  instrument  being  read  and  heard,  the  defendants  by  their  at- 
torney prayed  judgment  of  the  said  writ  and  declaration,  because  the 
supposed  covenant  in  the  said  declaration  mentioned,  if  any  such 
were  made^was  jointly  made  with  Fort  Ihrie,  who  sealed  and  deliv- 
ered'^also  the  said  deed,  who  is  still  living,  to  wit,  &c.,  and  not  by  the 
said  Samuel  J.  Reeves  and  Joseph  Cabot  alone,  wherefore,  inasmuch 
as  the  said  Fort  Ihrie  is  not  named  in  the  said  writ  and  declaration 
together  with  the  said  Samuel  J.  Reeves  and  Joseph  Cabot,  they,  the 
said  Samuel  J.  Reeves  and  Joseph  Cabot,  prayed  judgment  of  the  writ 
and  declaration  and  that  the  same  may  be  quashed,  &c. 

To  this  the  plaintiff  demurred,  and  stated  the  following  cause  of 
demurrer,  viz.,  "that  the  instrument  of  which  there  has  been  oyer, 
shows  on  the  face  thereof  that  the  said  defendants  are  bound  as  sure- 
ties for  the  said  Fort  Ihrie,  and  that  by  reason  of  the  subject  matter 
the  said  covenant  is  not  jointly  with  said  Fort  Ihrie,"  &c. 

The  court  below  entered  judgment  for  the  defendants  on  the  demur- 
rer, which  was  the  error  assigned. 

Strong,  J.*  That  the  covenant  for  the  payment  of  rent,  upon  which 
this  suit  was  brought,  imposed  upon  the  defendants  only  an  obligation 
jointly  with  Fort  Ihrie,  their  principal,  is  too  clear  for  doubt.  Itjs^a 
general  presumption  of  law,  when  two  or  more  persons  undertake  an 
obligation,  that  they  undertake  jointly.  Words  of  severance  are  nec- 
essary to  overcome  this  primary  presumption.  In  all  written  contract 
therefore,  whether  the  liability  incurred  is  joint  or  several,  or  joint 
and  several,  is  to  be  determined  by  looking  at  the  words  of  the  in- 
struments, and  at  them  alone.     The  subject-matter  of  the  contract, 

«  A  portion  of  the  lease  is  omitted. 


JOINT  AND  SEVEKAL  CONTEACTS  335 

and  the  interests  of  the  parties  assuming  a  liability,  have  nothing  to  do 
with  the  question.  It  may  be  otherwise  with  respect  to  the  rights  of 
the  covenantees,  where  there  are  more  than  one.  There  are  not  want- 
ing cases  in  which  it  has  been  held  that  when  the  interests  of  the  cove- 
nantees are  several,  they  may  sue  severally,  though  the  terms  of  the 
covenant  upon  which  they  sue  are  strictly  joint.  Even  this,  however, 
has  been  doubted.  But,  however  it  may  be  with  the  rights  of  cove- 
nantees, it  is  a  settled  rule  that  whether  the  liability  of  covenantors 
is  joint,  or  several,  or  both,  depends  exclusively  upon  the  words  of 
the  covenant.  And  the  language  of  severalty  or  joinder  is  the  test. 
The  covenant  is  always  joint,  unless  declared  to  be  otherwise.  Enys 
V.  Donnithorne,  2  Burrows,  1190;  Philips  v.  Bonsall,  2  Binn.  138.  Jt 
is  true,  that  in  the  covenant  to  pay  rent,  contained  in  the  lease  to  Fort 
Ihrie,  the  two  defendants  are  described  as  sureties,  but  they  and  the 
lessee  undertook  to  pay  the  rent  as  one  party.  Their  being  described 
as  sureties  cannot  be  regarded  as  a  declaration  of  intent  to  undertake 
severally.  Nor  does  the  covenant  contain  any  words  of  several  liabil- 
ity for  rent.  The  defendants  assumed  no  other  obligation  than  that 
thej, and-the  lessee  would  pay.  The  case  is  indubitably  within  the 
general  rule  that  a  covenant  by  two  or  morfe  is  joint  as  to  them,  if 
not  expressly  declared  several,  or  joint  and  several. 

The  plea  in  abatement  was  therefore  correctly  sustained,  and  thq 
judgment  on  the  demurrer  was  right.    The  judgment  is  affirmed 


2.  Contracts  both  Joint  and  Si;verai, 


PRESIDENT,  ETC.,  OF  BANGOR  BANK  v.  TREAT. 

(Supreme  Judicial   Court  of  Maine,  1S29.     6  Greenl.  207,  19  Am.  Dec.  210. » 

Mellen,  C.  J.  This  is  an  action  of  assumpsit  and  the  declaration 
states  that  the  note  was  signed  by  the  defendants  and  Allen  Oilman 
jointly  and  severally;  and  that  a  judgment  had  been  recovered  on 
the  note  against  Oilman  in  a  several  action  against  him.  The  defend- 
ants have  moved  in  arrest  of  judgment  on  account  of  the  joinder  of 
them  in  the  present  suit. 

When  three  persons  by  bond,  covenant,  or  note  jointly  and  sever- 
ally contract,  the  creditor  may  treat  the  contract  as  joint  or  several 
at  his  election,  and  may  join  all  in  the  same  action  or  sue  each  one 
severally;  but  he  cannot,  except  in  one  case,  sue  two  of  the  three,  be- 
cause that  is  treating  the  contract  neither  as  joint  or  several.  But  if 
one  of  the  three  be  dead,  and  that  fact  be  averred  in  the  declaration, 
the  surviving  two  may  be  joined. 


336  OPERATION   OF   CONTKACT 

In  the  present  case  Gilman  is  living.  The  plaintiffs  contend  that 
as  judgment  had  been  recovered  against  him,  such  judgment  entitled 
them  to  join  the  other  two  in  the  same  manner  as  though  he  was  dead. 
This  is  not  so.  Wihen  they  sued  Gilman  alone,  they  elected  to  con- 
sider the  promise  or  contract  as  several ;  and  having  obtained  judg- 
ment they  are  bound  by  such  election.  In  case  of  death,  the  act  of 
God  has  deprived  the  party  of  the  power  of  joining  all  the  contractors, 
but  he  may  still  consider  the  contract  as  joint,  and  sue  the  surviving 
two. 

The  plaintiffs  have  disabled  themselves  from  maintaining  this  ac- 
tion by  their  former  one.  1  Saund.  291  e.  The  objection  is  good  on 
arrest  of  judlgment  where  the  fact  relied  on  by  the  defendants  ap- 
pears on  the  record,  as  in  the  present  case.    Judgment  arrested. 


'^-^'^  '  /   ■'  INTEBPRETATION  OF  CONTKAC*  837 


)v a t^ Interpretation  of  contract 


I.  Rules  Relating  to  Evidence ' 
1.  Proof  of  Document 


RICHMOND  &  D.  R.  CO.  v.  JONES. 
(Supreme  Court  of  Alabama,  1S91.     92  Ala.  218,  9  South.  276.) 

Action  by  D.  W.  Jones  against  the  Richmond  &  Danville  Railroad 
Company  for  personal  injuries  alleged  to  have  been  caused  by  de- 
fendant's negligence.  There  were  three  counts  in  the  complaint.  The 
first  count  sought  to  recover  on  the  ground  that  the  injuries  were 
caused  by  reason  of  defects  in  the  condition  of  the  ways,  works,  ma- 
chinery, or  plant  connected  with  or  used  in  the  employ  of  defendant. 
In  the  second  count  of  the  complaint  the  plaintiff  based  his  right  of 
recovery  on  the  alleged  negligence  of  the  employes  of  the  defendant 
who  had  charge  and  control  of  the  train  by  which  plaintiff  was  in- 
jured, and  at  the  time  of  the  accident.  The  third  count  was  for  fail- 
ure of  the  fireman  on  defendant's  engine  to  transmit  plaintiff's  signal 
to- the  engineer. 

The  defendant  pleaded  the  general  issue,  and  by  special  plea  plead- 
ed a  written  contract  of  employment  entered  into  between  the  plain- 
tiff and  the  defendant  on  February  17,  1890, — not  quite  two  months 
before  the  accident, — one  of  the  terms  of  which  was  in  words  as  fol- 
lows: "Rule  23.  The  conditions  of  employment  by  the  company  are 
that  the  regular  compensation  paid  for  the  services  of  employes  shall 
cover  all  risks  incurred  and  liability  to  accident  from  any  cause  what- 
ever while  in  the  service  of  this  company.  If  an  employe  is  disabled 
by  accident  or  other  cause,  the  right  to  claim  compensation  for  in- 
juries will  not  be  recognized.  Allowances,  when  made  in  such  cases, 
will  be  as  a  gratuity,  justified  by  the  circumstances  of  the  case,  and 
previous  good  conduct  of  the  party.  The  fact  of  remaining  in  the 
service  of  the  company  will  be  consirlered  acceptance  of  these  condi- 
tions. All  officers  employing  men  to  work  for  this  company  will  have 
these  conditions  distinctly  understood  and  agreed  by  each  emplove 
before  he  enters  the  service  of  the  company." 

A  demurrer  to  the  plea  was  sustained.  Tliere  was  judgment  for 
the  plaintiff,  and  defendant  appeals. 

1  For  discussion  of  principles,  see  Clark  ou  Coutracts  (2d  Ed.)  §§  :i09-217. 

TUUOCK.M.CONT. — 22 


338  INTERPRETATION  OF  CONTRACT 

Coleman,  J.*  *  *  *  Defendant's  counsel,  having,  the  paper, 
Exhibit  A,  in  his  hands,  handed  it  to  plaintiff  while  on  cross-examina- 
tion as  a  witness,  and  asked)  him  if  he  signed  it.  Plaintiff's  counsel 
requested  to  see  the  paper,  which  request  defendant's  counsel  refused, 
saying  he  had  not  offered  it  in  evidence.  The  court  stated  that  it 
should  be  shown  to  plaintiff's  counsel  when  the  paper  was  offered  in 
evidence.  Plaintiff  then  answered  that  it  was  his  signature.  The  de- 
fendant afterwards  offered  the  paper  in  evidence,  to  which  the  plain- 
tiff objected,  on  the  grounds  that  there  .was  an  attesting  witness,  and 
the  execution  of  the  paper  had  not  been  properly  proven. 

Opposing  counsel  have  the  right  to  object  to  improper  questions 
to  witnesses,  and  the  rules  of  practice  require  them  to  specify  the 
grounds  of  objection.  Any  advantage  taken,  by  which  a  party  is  de- 
prived of  the  exercise  of  this  right  in  the  trial  of  a  case  without  neg- 
lect or  fault  on  his  part,  should  not  be  used  to  his  prejudice.  If  de- 
fendant did  not  purpose  to  introduce  the  paper  in  evidence,  the  ques- 
tion to  the  witness  was  improper.  If  it  was  the  intention  to  offer  it 
in  evidence,  then  it  should  have  been  submitted  to  opposing  counsel, 
so  that,  if  he  wished  to  object,  the  objection  could  be  made  in^proper 
fofnfT'The  ruling  of  the  court  sustaining  the  objection  to  the  intro- 
duction of  the  paper  is  supported  also  on  other  principles.  The  case 
of  Ellerson  v.  State,  69  Ala.  3,  after  stating  the  general  rule  that  the 
attesting  witness  should  be  called  to  prove  the  execution  of  an  instru- 
ment, declares  that  the  rule  extends  to  every  private  writing  which  the 
parties  may  have  chosen  to  cause  to  be  attested.  The  witness  is  con- 
sidered as  the  person  selected  and  referred  to  for  the  purpose  of 
proving  the  fact  of  execution,  and  the  facts  and  circumstances  attend- 
ing it ;  citing  1  Greenl.  Ev.  §569.  So  long  as  the  evidence  of  the  sub- 
scribing witness  can  be  produced,  it  is  the  best — the  primary  and  only 
— evidence  of  execution.  The  admissions  or  declarations  of  the  par- 
ties themselves  to  the  instrument  (not  made  in  open  court,  or  in  writ- 
ing, for  the  purpose  of  a  trial,  when  they  are  the  parties  litigant)  are 
not  admissible  for  this  purpose.     Russell  v.  Walker,  7Z  Ala.  317. 

It  is  contended  that  Exhibit  A  was  not  oft'ered  in  evidence  as  a 
contract  binding  upon  plaintiff,  but  merely  to  establish  the  existence 
of  rule  20,  and  notice  to  plaintiff,  and  for  this  purpose  it  was  ad- 
missible. The  proposition  contended  for  necessarily  must  be  that,  the 
rule  being  incorporated  in  the  contract  as  a  part  of  it,  its  existence 
and  materiality  as  evidence  against  the  plaintiff  may  be  established 
by  offering  in  evidence  the  contract  without  legal  proof  of  its  execu- 
tion. The  reasoning  is  not  sound.  To  establish  the  existence  of  the 
rule  and  notice  thereof  the  defendant  was  forced  to  rely  upon  an  un- 
proven  contract.  If  the  contract  is  excluded  because  its  existence  is 
not  proven,  it  cannot  be  said  that  admissions  which  alone  appear  in 
the  contract  have  been  proven.    If  plaintiff  had  not  admitted  his  sig- 

2  A  portion  of  the  opinion  is  omitted- 


EULES   EELATiNG   TO    EVIDENCE  339 

nature,  the  paper  would  not  have  been  offered  in  evidence.  The  ad- 
rnission  having  been  improperly  obtained,  and  the  execution  of  the 

paper  not  proven,  it  was  not  admissible  for  any  purpose.  *     *     * 

Afif^rmed.  ,^     ^..L^  ,  /-a.  .-— '^ 

^^  2.  Parol  Evidence 

(A)  In  General 


SMITH  V.  WILLIAMS. 
(Supreme  Court  of  North  Carolina,  1810.     5  N.  C.  426,  4  Am.  Dec.  504.) 

This  vvas  an  action  on  the  case  for  a  breach  of  warranty  in  the  sale 
of  a  negro.  The  declaration  stated,  "that  the  defendant  warranted 
the  negro  to  be  sound  and  healthy  as  far  as  he  knew ;  that  the  negro 
was  unsound  and  unhealthy,  being  afflicted  with  a  rupture,  and  that 
the  defendant  well  knew  he  was  so  afflicted  at  the  time  of  the  war- 
ranty and  sale."  The  jury  found  a  verdict  for  the  plaintiff,  subject  to 
the  opinion  of  the  court  on  a  point  of  law  reserved  in  the  course  of 
the  trial,  viz. :  Whether  the  plaintiff  could  be  permitted  to  prove  such 
a  warranty,  when  at  the  delivery  of  the  negro,  upon  the  sale,  he  re- 
ceived from  the  defendant  a  written  instrument,  but  not  under  seal, 
in  the  following  words :  ~  " 

"Know  all  men  by  these  presents,  that  I,  Obed  Williams,  of  the 
county  of  Onslow,  and  state  of  North  Carolina,  have  bargained  and 
sold  unto  David  Smith,  of  the  aforesaid  county  and  state,  one  negro 
fellow,  named  George,  about  thirty  years  of  age,  for  and  in  consider- 
ation of  three  hundred  dollars.  I  do  warrant  and  defend  the  said 
negro  against  the  lawful  claim  or  claims  of  any  person  or  persons 
whomsoever,  unto  him  the  said  Smith,  his  heirs  and  assigns  forever. 
Given  under  my  hand  this  29th  January,  1802. 

"Obed  Williams. 

"Teste :  George  Roan." 

This  instrument  had  been  proved  in  Onslow  county  court,  and  reg- 
istered.    The  point  reserved  was  sent  to  this  court. 

Taylor,  J.  The  contract  between  the  parties  is  stated  at  lengtli  in 
the  special  case,  and  appears  to  be  both  formally  and  substantially  a 
bill  of  sale  in  all  respects,  except  as  to  the  want  of  a  seal.  This  omis- 
sion, however,  is  so  important  in  the  legal  estimation  of  the  paper, 
that  it  cannot  be  classed  amongst  specialties,  but  must  remain  a  sim- 
ple contract,  on  which  no  additional  validity  can  be  conferred  by  the 
subsequent  registration.  For  I  do  not  apprehend  that  any  legal  effect 
can  be  given  to  a  paper  by  recording  it,  if  that  ceremony  were  not  re- 
quired by  law. 


340  INTERPRETATION  OF  CONTRACT 

It  might  not,  however,  be  an  useless  enquiry  to  consider,  whether 
a  paper  containing  nearly  all  the  component  parts  of  a  specialty  or 
deed,  does  not  advance  some  greater  claims  to  be  respected  in  the 
scale  of  evidence,  than  such  proofs  of  a  contract  as  rest  upon  the  mem- 
ory of  witnesses. 

The  solemnity  of  sealed  instruments  has  been,  from  the  earliest  pe- 
riods of  the  law,  highly  regarded;  because  the  forms  and  ceremonies 
which  accompany  them,  bespeak  deliberation  in  the  parties,  and  afford 
a  safe  ground  for  courts  and  juries  to'  ascertain  and  settle  contested 
rights.  This  deliberation  is  inferred,  not  from  any  one  circumstance 
attending  the  transaction,  but  as  the  general  effect  of  the  whole.  Thus 
in  Plowd.  308,  B:  "It  is  said  that  deeds  are  received  as  a  lien  final 
to  the  party  making  them,  although  he  received  no  consideration,  in 
respect  of  the  deliberate  mode  in  which  they  are  supposed  to  be  made 
and  executed;  for,  first,  the  deed  is  prepared  and  drawn;  then,  the^ 
seal  is  affixed;  and  lastly,  the  contracting  party  delivers  it,  which  is 
the  consummation  of  his  resolution."  Hence  it  appears,  that  the  law 
gives  to  deeds  a  respect  and  importance  which  it  denies  to  any  other 
contracts ;  not  an  empty  and  unmeaning  respect,  but  such  as  properly 
arises  from  the  existence  of  all  those  circumstances  which  are  calcu- 
lated to  fix  and  make  authentic  the  contracts  of  men. 

A  contract  cannot  be  a  deed,  if  either  it  is  not  prepared  and  drawn ; 
if  the  seal  be  not  affixed,  or  if  it  be  not  delivered ;  but  still  if  the  de- 
liberation is  inferred  from  all  these  circumstances,  it  is  fair  reasoning 
to  presume  some  degree  of  deliberation  from  any  one  or  two  of  them, 
and  to  give  to  the  paper,  when  it  is  introduced  as  evidence  of  the  par- 
ties' transaction,  precisely  such  credence  as  belongs  to  it,  from  its  par- 
taking more  or  less  of  the  nature  of  a  deed. 

To  give  this  rule  a  practical  application  to  the  case  before  us,  the 
conclusion  would  be,  that  as  the  paper  is  without  a  seal,  it  cannot  be  a 
deed,  and  is  therefore  not  decisive  evidence  as  that  instrument  is; 
it  is  not  a  final  lien;  but  as  it  possesses  some  of  the  essentials  of  a 
deed,  viz.  a  formal  draught  and  delivery,  so  far  it  shall  be  regarded 
as  evidence  of  no  slight  nature  of  the  fact  it  is  introduced  to  establish. 

The  writers  on  the  law  of  evidence  have  accordingly,  in  arranging 
the  degrees  of  proof,  placed  written  evidence  of  every  kind  higher  in 
the  scale  of  probability  than  unwritten ;  and  notwithstanding  the  splen- 
did eloquence  of  Cicero,  to  the  contrary,  in  his  declamation  for  the 
poet  Archias,  the  sages  of  our  law  have  said  that  the  fallibility  of  hu- 
man memory  weakens  the  effect  of  that  testimony  which  the  most 
upright  mind,  awfully  impressed  with  the  solemnity  of  an  oath,  may 
be  disposed  to  give.  Time  wears  away  the  distinct  image  and  clear 
impression  of  the  fact,  and  leaves  in  the  mind,  uncertain  opinions,  im- 
perfect notions  and  vague  surmises. 

It  is,  however,  contended  by  the  plaintiff,  that  contracts  by  our  law 
are  distinguished  by  specialty  and  by  parol;  that  there  is  no  third 
kind,  and  that  whatever  is  not  a  specialty,  though  it  be  in  writing,  is 


EULES  RELATING   TO    EVIDENCB  341 

by  parol.  To  establish  this  position,  a  case  is  cited  from  7  Term  R. 
350,  by  which  it  is  certainly  proved.  But  the  position  being  estab- 
lished, whether  it  will  authorize  the  inference  that  parol  evidence  is 
admissible  to  vary  and  extend  written  evidence,  will  best  appear  from 
an  examination  of  the  case,  and  from  some  attention  to  the  question 
which  called  for  the  solution  of  the  court. 

In  the  case  cited,  the  declaration  states,  that  the  defendant,  being 
indebted  as  administratrix,  promised  to  pay  when  requested,  and  the 
judgment  is  against  her  generally.  From  this  statement  it  is  manifest, 
that  the  promise  could  not  be  extended  beyond  the  consideration  which 
was  in  another  right  as  administratrix,  and  made  to  bind  the  defend- 
ant personally.  But  in  order  to  avoid  this  objection,  it  was  contended, 
that  the  promise  being  reduced  to  writing,  the  necessity  of  a  consider- 
ation was  dispensed  with ;  and  that  the  fact  of  its  having  been  made 
in  writing,  might  well  be  presumed  after  verdict,  if  necessary  to  sup- 
port the  verdict,  which  latter  position  was  conceded  by  the  court. 

It  is,  then,  perfectly  evident,  that  the  only  question  in  the  case  was, 
whether  nudum  pactum  could  be  alleged  against  a  contract  in  writing, 
but  without  seal?  That  it  could  not,  had  been  a  notion  entertained  by 
several  eminent  men,  and  amongst  the  rest  by  the  learned  commenta- 
tor, who  observes  that  "every  bond,  from  the  solemnity  of  the  instru- 
ment, and  every  note,  from  the  subscription  of  the  drawer,  carries 
with  it  internal  evidence  of  a  good  consideration."  This  doctrine,  how- 
ever, is  inaccurate  as  applied  to  notes,  when  a  suit  is  brought  by  the 
payee,  and  is  only  correct  as  between  the  indorsee  and  drawer.  To 
demonstrate  the  propriety  of  the  objection,  it  became  necessary  for  the 
court,  in  Ram  v.  Hughes,  to  enter  into  a  definition  and  classification 
of  contracts,  into  those  by  specialty  and  those  by  parol ;  to  which  lat- 
ter division  every  contract  belongs  that  is  not  sealed,  though  it  may 
be  written.  Every  written  unsealed  contract  is,  therefore,  in  the  strict 
language  of  legal  precision,  a  parol  contract,  and  like  all  others,  must 
be  supported  by  a  consideration. 

But  let  it  be  considered,  what  the  court  would  have  said,  if  the  case, 
instead  of  requiring  them  to  give  a  precise  and  comprehensive  defi- 
nition of  contracts,  had  called  upon  them  for  a  description  of  the  evi- 
dence by  which  contracts  may  be  supported.  They  would,  I  appre- 
hend, have  said,  (because  the  law  says  so,)  the  evidence  which  may 
be  adduced  in  proof  of  a  contract  is  threefold:  1st,  matter  of  record; 
2d,  specialty;  3d,  unsealed  written  evidence,  or  oral  testimony.  It  is 
therefore  necessary  to  distinguish  between  a  contract,  and  the  evidence 
of  a  contract,  for  though  they  may  be,  and  are,  in  many  cases,  identi- 
fied ;  yet,  in  legal  language,  a  parol  contract  may  be  proved  by  written 
evidence.  This  is  the  case  now  before  us,  and  this  brings  me  to  the 
question  it  presents,  which  I  understand  to  be,  wlicthcr  oral  evidence 
is  proper  to  extend  and  enlarge  a  contract  which  the  parties  have  com- 
mitted to  writing? 


342  INTERPRETATION  OF  CONTRACT 

The  first  reflection  that  occurs  to  the  mind  upon  the  statement  of  the 
question,  independent  of  any  technical  rules,  is,  that  the  parties,  by 
making  a  written  memorial  of  their  transaction,  have  implicitly  agreed, 
that  in  the  event  of  any  future  misunderstanding,  that  writing  shall 
be  referred  to,  as  the  proof  of  their  act  and  intention;  that  such  ob- 
ligations as  arose  from  the  paper,  by  just  construction  or  legal  intend- 
ment, should  be  valid  and  compulsory  on  them ;  but  that  they  would 
not  subject  themselves  to  any  stipulations  beyond  their  contract;  be- 
cause, if  they  meant  to  be  bound  by  any,  such,  they  might  have  added 
them  to  the  writing;  and  thus  have  given  them  a  clearness,  a  force, 
and  a  direction,  which  they  could  not  have  by  being  trusted  to  the 
memory  of  a  witness.  For  this  end,  the  paper  is  signed,  is  witnessed, 
and  is  mistakenly  recorded.  But  the  plaintiff  says,  "Besides  the  war- 
ranty of  title  contained  in  the  writing,  the  defendant  made  me  another 
warranty  as  to  the  quality,  which  I  can  prove  by  a  witness  present  at 
the  time ;  and  though  he  has  complied  with  the  warranty  which  was 
committed  to  writing,  yet  he  has  broken  the  one  which  was  orally 
made,  whence  I  am  injured  and  seek  compensation." 

We  are  then  to  decide,  whether  the  law  deems  such  proof  admis- 
sible. 

By  the  common  law  of  England,  there  were  but  few  contracts  nec- 
essary to  be  made  in  writing.  Property  lying  in  grant,  as  rights  and 
future  interests,  and  that  sort  of  real  property,  to  which  the  term  in- 
corporeal hereditament  applies,  must  have  been  authenticated  by  deed. 
So  the  law  remained  until  St.  32  Hen.  VIII.,  which,  permitting  a  par- 
tial disposition  of  land  by  will,  required  the  will  to  be  in  writing; 
but  estates  in  land  might  still  be  conveyed  by  a  symbolical  delivery 
in  presence  of  the  neighbors,  without  any  written  instrument;  though 
it  was  thought  prudent  to  add  security  to  the  transaction  by  the  char- 
ter of  feoffment.  The  statute  of  29  Car.  II.,  commonly  called  the 
statute  of  frauds,  has  made  writing  and  signing  essential  in  a  great 
variety  of  cases  wherein  they  were  not  so  before,  and  has  certainly 
increased  the  necessity  of  caution  in  the  English  courts,  with  respect 
to  the  admission  of  verbal  testimony,  to  add  to  or  alter  written  instru- 
ments, in  cases  coming  within  the  provisions  of  that  statute.  That 
law,  being  posterior  to  the  date  of  the  charter  under  which  this  state 
was  settled,  has  never  had  operation  here;  so  that  the  common  law 
remained  unaltered  until  the  year  1715,  when  a  partial  enactment  was 
made  of  the  provisions  of  the  English  statute. 

The  law  must  therefore  be  sought  for  in  cases  arising  before  the 
statute  of  frauds,  and  expositions  upon  that  statute  are  no  otherwise 
authoritative  than  as  they  affirm  or  recognize  the  ancient  law.  But 
I  believe  there  can  be  no  doubt  that  the  rule  is  as  ancient  as  any  in 
the  law  of  evidence,  and  that  it  existed  before  the  necessity  of  reducing 
any  act  into  writing  was  introduced. 

In  Plowd.  345,  Lord  Dyer  remarks,  "Men's  deeds  and  wills,  by 


RULES  EELATING   TO    EVIDENCE  343 

which  they  settle  their  estates,  are  the  laws  which  private  men  are 
allowed  to  make,  and  they  are  not  to  be  altered  even  by  the  king,  in 
his  courts  of  law  or  conscience." 

In  Rutland's  Case,  5  Coke,  the  court  resolved  that  it  was  very  in- 
convenient that  matters  in  writing  should  be  controlled  by  averment 
of  parties,  to  be  proved  by  uncertain  testimony  of  slippery  memory, 
and  should  be  perilous  to  purchasers,  farmers,  &c. 

The  case  of  Meres  v.  Ansel,  3  Wilson,  275,  is  directly  in  point  upon 
the  general  principle,  to  shew  that  parol  evidence  shall  not  be  admitted 
to  contradict,  disannul  or  substantially  vary  a  written  agreement. 

In  2  Atk.  384,  Lord  Hardwicke  says:  "It  is  not  only  contrary  to 
the  statute,  but  to  common  law,  to  add  anything  to  a  written  agree- 
ment by  parol  evidence." 

All  written  contracts,  says  Justice  Ashurst,  whether  by  deed  or  not. 
are  intended  to  be  standing  evidence  against  the  parties  entering  into 
them.    4  Term  R.  331. 

1  Ves.  Jr.  241,  parol  evidence  to  prove  an  agreement  made  upon  the 
purchase  of  an  annuity  that  it  was  redeemable,  was  rejected. 

In  a  very  recent  case,  in  7  Ves.  211,  we  are  furnished  with  the 
opinion  of  the  present  master  of  rolls.  Sir  William  Grant,  than  whom 
no  judge  ever  ranked  higher  in  the  estimation  of  his  contemporaries, 
for  profound  and  accurate  knowledge  in  legal  science,  and  a  proper 
and  discriminating  application  of  well  grounded  principles  to  the  cases 
which  arise  in  judgment  before  him.  His  observations  are,  "By  the 
rule  of  law,  independent  of  the  statute,  parol  evidence  cannot  be  re- 
ceived to  contradict  a  written  agreement.  To  admit  it  for  the  purpose 
of  proving  that  the  written  instrument  does  not  contain  the  real  agree- 
ment, would  be  the  same  as  receiving  it  for  every  purpose.  It  was 
for  the  purpose  of  shutting  out  that  enquiry  that  the  rule  was  adopted. 
Though  the  written  instrument  does  not  contain  the  terms,  it  must,  in 
contemplation  of  law,  be  taken  to  contain  the  agreement,  as  furnish- 
ing better  evidence  than  any  parol  can  supply." 

To  these  authorities,  I  will  add  a  decision  of  the  circuit  court  of 
Pennsylvania,  because  it  appears  to  be  in  principle  the  very  case  under 
consideration. 

An  action  on  the  case  was  brought  by  the  assignee  of  a  bond  against 
the  assignor,  upon  a  written  assignment  in  general  terms.  The  plain- 
tiffs offered  oral  evidence  to  shew  that  the  defendant  had  expressly 
guarantied  the  payment  of  the  bond.  "Chase,  Justice.  You  may  ex- 
plain, but  you  cannot  alter  a  written  contract  by  parol  testimony.  A 
case  of  explanation  implies  uncertainty,  ambiguity  and  doubt  upon 
the  face  of  the  instrument.  But  the  proposition  now  is  a  plain  case  of 
alteration ;  that  is,  an  offer  to  prove  by  witnesses,  that  the  assignor 
promised  something  beyond  the  plain  words  and  meaning  of  his  writ- 
ten contract.  Such  evidence  is  inadmissible,  and  has  been  so  adjudged 
in  the  supreme  court,  in  Clarke  v.  Ru:i.:>cl,  3  Dall.  415,.  1  L.  Ed.  660. 


344  INTERPRETATION  OF  CONTRACT 

I  grant  that  chancery  will  not  confine  itself  to  the  strict  rule,  in  cases 
of  fraud,  and  of  trust;  but  we  are  sitting  as  judges  at  common  law, 
and  I  can  perceive  no  reason  to  depart  from  it." 

I  suppose  the  above  authorities  are  amply  sufficient  to  establish  the 
proposition  for  which  they  are  cited,  and  therefore  I  forbear  to  make 
any  other  references  for  that  purpose.  The  exceptions  to  the  general 
rule  may  be  comprised  under  the  heads  of  fraud,  surprise,  mistake,  in 
cases  of  resulting  trust,  to  rebut  an  equity,  or  to  explain  latent  am- 
biguities; and  there  may  also  be  some  other  cases  which  cannot  be 
properly  ranged  under  the  titles  specified.  But  as  the  case  stated  is, 
in  my  opinion,  directly  opposed  by  the  general  rule,  so  far  as  it  seeks 
to  establish  the  proof  of  warranty  as  to  quality,  by  parol,  and  presents 
no  fact  to  bring  it  within  any  of  the  exceptions,  it  would  be  needless  to 
multiply  authorities  with  respect  to  them. 

As  to  the  exception  on  the  ground  of  fraud,  I  conceive  that  only 
occurs,  where  something  intended  to  have  been  inserted  in  the  con- 
tract, is  omitted  through  the  misrepresentation  or  unfair  practice  of 
one  of  the  parties.  In  such  case,  the  omission  may  be  supplied  by 
parol  evidence.  But  there  is  no  allegation  here  that  the  additional 
warranty  was  intended  or  understood  by  either  party  to  have  been  in- 
serted in  the  agreement. 

It  is  also  necessary  to  attend  to  the  nature  of  the  remedy  adopted 
by  the  plaintiff  in  this  case,  which  is  founded  on  the  warranty,  and  is 
in  assumpsit.  The  questions  arising  upon  the  general  issue  are,  wheth- 
er the  warranty  was  made,  and  whether  it  was  true  at  the  time  of  mak- 
ing. For  if  the  warranty  were  made,  and  not  complied  with,  it  is 
wholly  immaterial  whether  the  defect  was  known  to  the  seller  or  not, 
— a  principle  that  seems  to  extend  to  every  case  where  the  plaintiff 
proceeds  on  the  warranty.  But  in  an  action  of  deceit,  the  scienter  or 
fraud  is  a  material  part  of  the  declaration,  and  must  be  brought 
home  to  the  defendant  to  authorize  a  recovery  against  him,  and  in 
such  case  it  seems,  from  the  authorities,  that  proofs  of  the  fraudu- 
lent conduct  of  the  defendant  may  be  drawn  from  sources  dehors 
the  written  contract. 

It  cannot  be  contended  that  inserting  the  scienter  in  a  declaration  on 
the  warranty,  will  convert  it  into  an  action  of  deceit  founded  on  tort. 
In  the  latter  action,  the  knowledge  of  the  defendant,  or  something 
equivalent  to  it,  by  which  the  fraud  is  charged,  is  a  substantive  allega- 
tion, and  must  be  proved;  in  the  former,  it  is  merely  surplusage,  and 
may  be  rejected. 


W  (as  n  t  I- 

BULES   EELATING   TO    EVIDENCE  345 


(B)  Evidence  of  Custom  and  Usage 


COOPER  V.  KANE. 
(Supreme  Court  of  New  York,  1838.     19  Weud.  386,  32  Am.  Dec.  512.) 

This  was  an  action  of  replevin,  tried  at  the  Albany  circuit  in  Oc- 
tober, 1835,  before  the  Hon.  Hiram  Denio,  then  one  of  the  circuit 
judges. 

The  action  was  in  the  detinet  for  detaining  a  quantity  of  sand  taken 
from  a  lot  in  the  city  of  Albany  belonging  to  the  plaintiff,  which  the 
defendant  had  excavated  under  a  contract  with  the  plaintiff,  so  as 
to  make  the  lot  conform  to  a  profile  or  plan  of  the  streets  established 
by  the  corporation.  The  contract  was  in  writing;  the  defendant  was 
to  excavate  the  lot  and  make  the  necessary  embankments  within  a  lim- 
ited time,  for  which  he  was  to  be  paid  by  the  plaintiff  $180,  when 
the  work  was  done.  The  defendant  completed  the  job  and  was  paid 
the  stipulated  price.  Whilst  engaged  in  the  work,  the  defendant* 
placed  a  large  quantity  of  sand,  which  was  taken  off  of  the  lot  in  or- 
der to  make  it  conform  to  the  required  plan,  on  an  adjoining  lot  not 
belonging  to  the  plaintiff,  and  when  requested  by  the  plaintiff  to 
permit  her  to  take  it  away,  he  refused  such  permission ;  for  this 
detention  the  action  was  brought.  There  was  no  stipulation  in  the 
contract  as  to  whom  the  sand,  taken  from  the  lot  in  making  the  ex- 
cavation, should  belong  after  it  was  taken  off  the  lot. 

The  defendant  then  oft'ered  to  prove  a  custom  of  the  city  of  Albany 
which  had  existed  for  a  great  number  of  years  and  was  well  known 
and  understood,  that  in  the  excavation  of  lots,  the  material  excavated 
belonged  to  the  excavator  and  not  to  the  owner  of  the  lot,  unless  there 
was  an  express  reservation  in  the  contract  to  the  contrary.  The  judge 
rejected  the  testimony,  and  instructed  the  jury,  that  on  the  evidence 
adduced  the  plaintiff  was  entitled  to  their  verdict,  who  accordingly 
found  a  verdict  for  the  plaintiff  with  six  cents  damages,  and  six 
cents  costs,  and  assessed  the  value  of  the  property  at  $157.  The.  de- 
fendant moves  for  a  new  trial.  The  cause  was  submitted  on  written 
arguments. 

Nelson,  C.  J.  I  am  inclined  to  the  opinion  that  the  evidence  of  the 
custom  in  respect  to  contracts  like  the  one  out  of  which  this  action 
has  arisen,  by  way  of  explaining  it,  and  which  was  offered  by  the  de- 
fendant for  that  purpose,  was  admissible.  It  did  not  go  to  vary  any 
express  or  necessarily  implied  stipulations  between  the  parties  therein 
contained,  but  rather  to  establish  what  amounted  to  a  complete  per- 
formance agreeably  to  the  presumed  understanding  of  the  parties. 

Mr.  Starkie  says  (2  Starkie,  Ev.  258,  259),  "where  parties  have 
not   entered    into   any   express   and    specific   contract,    a   presumption 


346  INTERPRETATION  OF  CONTRACT 

nevertheless  arises,  that  they  meant  to  contract  and  to  deal  according 
to  the  general  usage,  practice  and  understanding,  if  any  such  exist,  in 
relation  to  the  subject  matter."  The  same  rule  of  evidence  is  also 
recognized  by  Phillipps  (volume  1,  pp.  420,  421),  and  Lord  Kenyon 
remarked  in  Whitnel  v.  Gratham,  6  Term  R.  398,  that  evidence  of 
usage  was  admissible  to  expound  a  private  deed,  as  well  as  the  king's 
charter.  The  right  of  carriers,  dyers,  wharfingers,  &:c.  to  a  lien  on  the 
goods  entrusted  to  them  for  their  compensation,  is  frequently  estab- 
lished by  usage,  independently  of  the  co;itract. 

In  Rushforth  v.  Hadfield,  6  East,  519,  Lord  EHenborough  permit- 
ted the  defendants  (common  carriers)  to  go  into  proof  of  common 
usage  to  detain  the  goods  for  a  general  balance,  on  the  ground  of  an 
implied  agreement  arising  out  of  it  between  the  parties.  He  observed 
that  if  there  be  a  general  usage  of  trade  to  deal  with  common  carriers 
in  this  way,  all  persons  dealing  in  the  trade  are  supposed  to  contract 
with  them  upon  the  footing  of  the  general  practice,  adopting  the  gen- 
eral lien  into  their  contract.  Lawrence,  J.,  admitted  that  the  lien  must 
be  by  contract  between  the  parties,  but  observed  that  usage  of  trade 
was  evidence  of  the  contract,  and  if  so  long  established  as  to  afford  a 
presumption  it  was  commonly  known,  it  was  fair  to  conclude  the  par- 
ticular parties  contracted  with  reference  to  it. 

In  Kirkman  v.  Shawcross,  6  Term  R.  14,  the  dyers,  dressers,  whist- 
ers,  printers,  &c.,  of  a  neighborhood,  held  a  public  meeting  and  entered 
into  an  agreement  that  they  would  receive  no  more  goods  in  the  way 
of  their  trade,  except  on  the  condition  that  they  should  have  a  lien  on 
them  for  a  general  balance,  which  was  extensively  published.  The 
court  held  that  any  person  who  delivered  goods  to  them  after  notice 
must  be  deemed  to  have  assented  to  the  terms  prescribed ;  and,  as  we 
have  seen,  notice  might  be  inferred  from  the  general  notoriety  of  the 
terms  thus  published. 

Now,  in  this  case,  there  is  simply  an  agreement  to  excavate  the  earth 
in  a  certain  street  and  to  make  the  necessary  embankment,  according 
to  a  map  of  the  corporation,  for  a  given  compensation.  Nothing  is 
said  about  the  surplus  earth,  where  it  is  to  be  laid,  or  what  is  to  be 
done  with  it.  Would  it  be  a  workmanlike  execution  of  the  contract 
to  pile  it  upon  the  adjacent  bank?  or  may  the  contractor  dispose  of  it 
as  he  sees  fit,  and  as  most  convenient  and  profitable  to  himself?  It 
appears  to  me,  the  solution  of  these  questions  may  very  well  be  re- 
ferred to  common  usage  in  such  cases,  if  any  exist;  and  that  if  it 
should  be  proved  as  said  by  Lawrence,  J.,  "It  is  fair  to  conclude  the 
particular  parties  contracted  with  reference  to  it."  This  usage  may 
often  have  a  very  important  influence  upon  the  minds  of  the  parties  as 
exemplified  in  this  case:  for  the  value  of  the  materials,  which  the 
plaintiff  has  recovered,  nearly  equals  the  price  of  the  job.  If  in  fact 
the  usage  exists,  and  the  contract  was  made  in  reference  to  it,  serious 
injustice  must  be  the  result  of  upholding  the  verdict.  New  trial 
granted. 


\C*\^<- 


!U-t/  -t^x^K^.   1'-'-^-.    *? 

«^^   ,...  , ..       -uA».f,         BULES  OF  CONSTKUCTION^„.  347 

j^T-?cr/,  /^^'  tu,vU:^II.  Rules  of  Construction* 

'^^-tf  UjL   A,xt*-.<-w>.^.<^     -<t^     1.   In  GENERAI.  faf^'T 

^^-w^  A-^yt^-v    Z^'^'^^/^;  "7TTTT  /-r  ^ 

Li  U^rA^iUtuy     IM^  ^^wpi^ANO  MFG.  CO.  v.  ELUS. 

'»^^'^*^    "Y^Supreme  Court  of  Michigan,  1888.     68  MictL '  101,' 35  N.  W.  841.) 

^  .   This  is  an  action  of  assumpsit,  commenced  in  the  recorder's  court 

t-n^i^Q^  the  city  of  Niles,  Michigan,  by  summons  issued  September  26,  1885. 
"*  ■  Plaintiff  declared,  orally,  on  the  common  counts,  in  assumpsit  and 
'"^^^  filed  this  bill  of  particulars :  "Plaintiff's  declaration :  Common  counts 
in  assumpsit  for  the  price  and  value  of  one  Piano  Manufacturing  Co. 
binder  sold  and  delivered  to  the  defendant  by  the  plaintiff  for  the 
sum  of  $120."  Defendant  pleaded  the  general  issue,  v^ith  notice.  The 
recorder  rendered  judgment  for  the  defendant,  and  plaintiff  appealed 
to  the  circuit  court,  Berrien  county,  where  judgment  was  rendered  for 
plaintiff.     Defendant  appealed. 

Champlin,  J.  On  the  eighth  day  of  July,  1885,  the  plaintiff, 
through  its  agents  Harder  &  Haynes,  entered  into  an  agreement  with 
defendant  in  writing,  as  follows: 

"Niles,  Michigan,  July  8,  1885. 
"We  hereby  agree  to  let  Peter  Ellis  have  the  sample  Piano  binder, 
1885,  at  same  price  that  Mr.  Ream  has  his  for,  and  the  binder  is  to 
do  good  work  and  give  satisfaction ;   and,  if  not,  the  said  Ellis  is  to 
pay  for  use  of  same.  Flarder  &  Haynes. 

"Peter  Ellis." 
Plaintiff,  by  its  agents,  delivered  a  Piano  hinder  at  defendant's 
farm,  and  set  it  up,  and  put  it  in  operation.  Defendant  used  it  in 
cutting  about  95  acres  of  grain,  and  claims  that  it  did  not  do  good 
work,  and  did  not  give  to  him  satisfaction ;  and,  on  July  27,  1885,  he 
served  written  notice  on  Harder  &  Haynes,  as  follows : 

"Niles,  Mich.,  July  27,  1885. 
"Messrs.  Harder  &  Haynes— Gentlemen :  The  sample  Piano  binder, 
that  you  let  me  have  on  trial,  does  not  do  good  work,  and  does  not 
give  satisfaction.  I  am  not  satisfied  with  it.  It  is  at  my  place,  where 
you  left  it,  subject  to  your  order;  you  can  come  and  take  it.  I  am 
willing  to  pay  for  the  use  of  the  same,  and  hereby  offer  so  to  do. 
"Yours,  etc.,  Peter  Ellis." 

On  the  trial,  testimony  was  offered  to  show  how  the  machine  work- 
ed. The  defendant's  counsel  objected  to  its  introduction,  as  being 
immaterial.     The  circuit  judge  overruled  the  objection,  and  admitted 

3  For  di.scu.ssiuu  of  ininciples,  aeo  Clarlc  ou  Coutracts  (2(1  Ed.)  §§  218,  21JK 


348  INTERPRETATION  OF  CONTRACT 

the  testimony,  saying:  "My  opinion  of  the  construction  of  this  con- 
tract is  this :  that  it  is  to  be  a  satisfactory  machine,  not  to  him,  but 
such  as  people  knowing  the  quality  of  machines  would  be  satisfied 
with;   it  is  to  do  satisfactory  work." 

Under  this  ruling  a  large  amount  of  testimony  was  received  as  to 
the  working  of  the  machine  while  in  defendant's  possession,  and  the 
circuit  judge,  construing  the  instrument,  in  his  charge  to  the  jury,  in- 
structed them  as  follows:  "As  I  said  in  the  outset,  this  word  'satis- 
faction' has  no  further  significance  than  the  fact  that  it  should  be  a 
good  machine,  and  do  good,  reasonable  work,  which  would  be  satis- 
factory to  intelligent,  reasonable  men  using  machinery."  And  again : 
"The  question  for  you  to  determine  is,  was  this  machine  capable,  with 
proper  management,  of  doing  as  good  work  as  those  that  are  called 
good,  first-class  machines,  working  through  the  country,  under  the 
same  circumstances,  and!  in  the  same  kind  of  grain?  Was  it  a  good 
machine,  and  did  it  do  good  work,  under  proper  management,  and 
proper  conditions ;  did  it  do  that  kind  of  work  so  it  should  have  been 
satisfactory  to  a  man  of  intelligence  in  relation  to  this  kind  of  ma- 
chines; did  it  do  that?    That  is  the  question." 

We  are  of  opinion  that  the  circuit  court  erred  in  the  construction 
which  he  placed  upon  the  contract.  A  cardinal  axiom,  in  the  construc- 
tion of  written  contracts,  is  that  all  the  parts  must  be  examined,  and 
effect  given  to  every  word  and  phrase,  if  practicable.  Vary  v.  Shea, 
36  Mich.  388;  Norris  v.  Showerman,  Walk.  Ch.  206;  Id.,  2  Doug. 
16;  Paddock  v.  Pardee,  1  Mich.  421;  Howell  v.  Richards,  11  East, 
643.  The  object  is  to  arrive  at  the  intention  of  the  parties ;  and  this 
is  to  be  deduced  from  the  language  employed  by  them  to  express  their 
intention.  If  the  language  employed  is  not  free  from  doubt  or  un- 
certainty, resort  may  be  had  to  the  condition  of  the  respective  parties, 
the  subject-matter  of  the  contract,  and  the  circumstances  surrounding 
the  transaction  and  connected  with  it,  and  everything  except  the  con- 
temporaneous and  previous  declarations  of  the  parties,  for  the  purpose 
of  enabling  the  court  to  ascertain  the  intention  of  the  parties.  Mills 
V.  Spencer,  3  Mich.  127,  136. 

Applying  the  above  principles  of  construction  to  the  writing  in- 
troduced as  the  basis  of  plaintiff's  claim,  it  is  clear  that  the  binder 
was  not  only  to  dlo  good  work,  but  it  was  to  give  satisfaction  to  de- 
fendant. Unless  he  was  satisfied  with  the  machine,  although  it  did 
good  work,  he  was  not  bound  to  purchase.  The  construction  placed 
on  the  instrument  by  the  circuit  judge  completely  nullify  the  words 
"and  give  satisfaction."  He  construed  them  as  synonymous  with,  to 
do  satisfactory  work,  such  as  people  knowing  the  quality  of  machines 
would  be  satisfied  with ;  or,  to  use  his  own  language,  "this  word  'sat- 
isfaction' has  no  further  significance  than  the  fact  that  it  should  be 
a  good  machine,  and  do  good,  reasonable,  work,  which  would  be 
satisfactory  to  reasonable  men  using  machinery." 

This,  certainly,  is  not  the  usual  signification  of  the  word,  and  there 


RULES   OF   CONSTRUCTION 


349 


is  nothing  in  the  context,  or  in  the  subject-matter,  which  indicates  that 
the  word  was  used  in  any  other  than  its  ordinary  meaning.  The  ven- 
dor had  already  agreed  that  the  binder  should  "do  good  work,"  and 
if  the  learned  judge  had  defined  that  phrase  in  the  same  way  he  did 
the  word  "satisfaction,"  it  would  have  been  applicable  and  proper. 
No  one  can  read  this  writing,  and  give  to  the  words  their  ordinary 
meaning,  without  understanding  that  something  more  was  required 
than  that  the  binder  should  do  good  work  before  defendant  was 
obliged  to  keep  and  pay  for  the  machine.  He  was  not  obliged  to  do 
so  unless,  also,  it  gave  satisfaction  to  him. 

We  may  not  take  judicial  notice  of  the  fact,  but  we  may  well  sup- 
pose that  there  is  a  choice  between  machines  for  reaping  and  binding 
that  do  good  work.  It  may  be  that  a  machine  which  will  do  good, 
satisfactory  work  in  reaping  and  binding,  may,  at  the  same  time,  have 
more  side-draught  than  another,  or  it  may  be  so  geared  as  to  require 
much  more  power  to  propel  it  than  another,  or  its  machinery  may  be 
complicated,  and  so  constructed  as  to  easily  get  out  of  repair,  or  re- 
quire greater  care  and  skill  in  operating  it.  All  these  things  may  not 
be  impossible,  or  even  improbable.  How,  then,  can  it  be  said  that,  al- 
though it  does  good  work,  nevertheless  it  may  not  give  satisfaction? 
Or  why  should  it  be  said,  when  the  bargainer  has  reserved  the  right 
to  elect  whether  he  be  fully  pleased  or  not,  that  he  is  bound  to  be 
pleased  if  another  reasonable  or  intelligent  man  is  pleased  with  the 
work  of  such  machine? 

There  is  another  clause  in  the  contract  which  has  a  bearing  upon 
the  question.  It  is  stipulated  that  if  the  machine  does  not  do  good 
w^ork,  and  give  satisfaction,  the  said  Ellis  is  to  pay  for  the  use  of  the 
same.  It  cannot  be  contended,  with  reason,  that  Ellis  agreed  to  pay 
for  the  use  of  a  machine  that  did  not  do  good  work.  This  clause  im- 
plies that  it  may  do  good  work,  and  yet  not  give  satisfaction  so  that 
he  will  be  willing  to  keep  and  pay  for  it.  He  agreed  that,  if  it  did 
not  do  good  work,  and  give  satisfaction,  he  would  pay  for  the  use  of 
the  binder.  He  was  entitled,  under  the  agreement,  to  give  the  ma- 
chine a  thorough,  practical  trial;  and  then,  if  he  was  not  satisfied 
with  it,  he  was  to  pay  for  the  use  of  it.  This  provision  entitles  the 
writing  to  a  liberal  construction  in  his  favor.  It  shows  that  he  had 
an  option  to  accept  or  reject  the  binder,  according  as  it  gave  him 
satisfaction  or  not. 

A  proper  construction  of  the  contract  clearly  brings  it  within  the 
first  class  of  such  contracts  referred  to  in  Machine  Co.  v.  Smith.  50 
Mich.  565-569,  15  N.  W.  906,  45  Am.  Rep;  57.  and  is  governed  by 
the  decision  in  that  case.  The  judgment  must  be  reversed  and  a  new 
trial  granted. 


350  INTBBPRETATION  OF  CONTBACT 


2.  Rules  as  to  Time 


BECK  &  PAULI  LITHOGRAPHING  CO.  v.  COLORADO  MILL- 
ING &  ELEVATOR  CO. 

(Circuit  Court  of  Appeals,  Eighth  Circuit,  1892.    52  Fed.  700,  3  C.  C.  A.  248.) 

In  error  to  the  circuit  court  of  the  United  States  for  the  district 
of  Colorado.     Reversed. 

Statement  by  Sanborn,  Circuit  Judge : 

This  was  an  action  by  the  plaintiff  in  error  to  recover  the  contract 
price  of  certain  stationery  and  advertising  matter  furnished  the  de- 
fendant. It  was  tried  on  the  merits,  and  at  the  close  of  the  evidence 
the  court  instructed  the  jury  to  return  a  verdict  for  the  defendant, 
and  this  instruction  is  assigned  as  error. 

The  plaintiff  was  a  corporation  of  Wisconsin,  engaged  in  litho- 
graphing and  printing,  and  its  principal  place  of  business  was  at  Mil- 
waukee, in  that  state.  The  defendant  was  a  corporation  of  Colorado, 
engaged  in  the  business  of  milling,  and  its  principal  place  of  business 
was  at  Denver,  in  that  state.  In  June,.  J.889,^the  plaintiff  agre-ed  to 
make  new  designs  of  certain  buildings  of  defendant,  with  sketches 
of  its  trade-marks;  to  execute  engravings  thereof  in  a  strictly  first- 
class  style ;  to  embody  these  on  the  stationery  described  below ;  to 
submit  to  defendant  for  approval  proofs  thereof ;  to  submit  designs 
and  proofs  of  hangers,  on  fine  chromo  plate,  for  advertising  defend- 
ant's business,  by  the  following  fall ;  to  engrave  a  strictly  first-class 
vignette  of  one  of  defendant's  plants ;  to  submit  a  sketch  and  proof 
thereof  to  defendant;  to  furnish  defendant  with  10,000  business  cards 
and  5,000  checks  in  August,  1889;  to  furnish,  in  the  course  of  the 
year,  letter  heads,  note  heads,  bill  heads,  statements,  bills,  envelopes, 
and  cards  to  the  defendant  to  the  number  of  331,100,  and  5,000  hang- 
ers;  and  to  furnish  the  vignette  and  5,000  hangers  more  after  the  ap- 
proval of  the  proofs  thereof  by  the  defendant.  The  defendant  agreed 
to  take  and  pay  for  this  stationery,  this  vignette,  and  these  hangers  at 
certain  agreed  prices,  which  amounted  in  the  aggregate  to  about  $6J)iJX 
The  plaintiff  furnished  the  10,000  cards  and  5,000  checks  required 
under  the  contract  in  August,  1889,  and  the  defendant  received  and 
paid  for  them. 

The  plaintiff  introduced  testimony  to  the  effect  that  it  strictly  com- 
plied with  and  fully  performed  these  contracts  in  every  respect,  ex- 
cept that  it  shipped  the  articles  contracted  for  (which  were  no*  de- 
livered in  August)  by  rail  from  Milwaukee  to  the  defendant,  at  Den- 
ver, in  December,  1889,  in  five  boxes,  four  of  which  did  not  arrive  at 


EULES   OF  CONSTBUCTION  351 

Denver  until  9:42  a.  m.,  January  1,  1890,  and  the  fifth  did  not  arrive 
there  until  January  4,  1890;  that  before  January  8,  1890,  all  of  these 
articles  were  tendered  to  the  defendant  and  it  refused  to  examine  or 
receive^lhem ;  that  the  sketches  and  proofs  of  the"  designs,  trade- 
marks, and  hangers  had  been  submitted  to  and  approved  by  the  de- 
fendant during  the  summer  and  fall  of  1889,  before  these  articles  were 
manufactured,  and  that  the  last  proof  was  approved  November  16, 
1889;  that  on  December  16,  1889,  the  defendant  wrote  the  plaintiff 
to  forward  by  express  2,000  statements  and  3,000  envelopes  "as  per 
proofs  submitted;"  that  the  state  of  the  art  and  process  of  litho- 
graphing is  such  that,  after  the  general  idea  of  a  piece  of  work  is 
conceived,  it  is  customary  to  make  first  a  pencil  design,  and,  when  this 
is  found  satisfactory,  to  prepare  a  colored  sketch  where  colored  work 
is  required;  that  after  the  sketch  is  colored  it  is  lithographed,  that 
is,  transferred  to  a  stone;  that  each  color  requires  a  separate  stone; 
and  in  these  hangers  there  were  nine  colors;  that  it  requires  from 
two  to  three  months  to  reproduce  on  stone  a  colored  sketch  like  that 
used  for  the  hangers;  that  the  artists'  work  and  the  reproduction  on 
stone  were  the  most  expensive  parts  of  this  work  contracted  for; 
and  that  the  expense  of  the  materials  and  printing  was  but  a  small 
part  of  the  entire  expense  of  the  work. 

Before  Caldwell  and  Sanborn,  Circuit  Judges,  and  Siiiras,  Dis- 
trict Judge. 

Sanborn,  Circuit  Judge  (after  stating  the  facts).  The  ground  on 
which  it  is  sought  to  sustain  the  instruction  of  the  court  below  to  re- 
turn a  verdict  for  the  defendant  in  this  case  is  that  the  plaintiff  failed 
to  tender  or  deliver  the  articles  contracted  for  to  the  defendant,  at 
Denver,  until  six  or  eight  days  after  the  expiration  of  the  year,  that 
the~plaintiff  did  not  therefore  furnish  them  "in  the  course  of  the 
year,"  and  that  this  failure  justified  the  defendant  in  repudiating  the 
contract,  and  refusing  to  pay  any  part  of  the  contract  price. 

It  is  a  general  principle  governing  the  construction  of  contracts 
that  stipulations  as  to  the  time  of  their  performance  are  not  neces- 
sarily of  their  essence,  unless  it  clearly  appears  in  the  given  case  from 
the  express  stipulations  of  the  contract  or  the  nature  of  its  subject- 
matter  that  the  parties  intended  performance  within  the  time  fixed 
in  the  contract  to  be.a  condition  precedent  to  its  enforcement,  and, 
where  the  intention  of  the  parties  does  not  so  appear,  performance 
shoHTy  aTter'the  time  limited  on  the  part  of  either  party  will  not  jus- 
tify a  refusal  to  perform  by  the  party  aggrieved,  but  his  only  remedy 
will  be  an  action  or  counterclaim  for  the  damages  he  has  sustained 
from  the  breach  of  the  stipulations. 

In  the  application  of  this  principle  to  the  cases  as  they  have  arisen, 
in  the  promulgation  of  the  rules  naturally  deduced  from  it,  and  in 
the  assignment  of  the  various  cases  to  the  respective  classes  in  which 
the  stipulation  as  to  time  of  performance  is,  or  is  not,  deemed  of  the 


352  INTERPRETATION  OF  CONTRACT 

essence  of  the  contract,  the  controlling  consideration  has  been,  and 
ought  to  be,  to  so  decide  and  classify  the  cases  that  unjust  penalties' 
may  not  be  inflicted,  nor  unreasonable  damages  recovered.  TJius,_ia 
the  ordinary  contract  of  merchants  for  the  sale  and  delivery,  or  the 
manufacture  and  sale,  of  marketable  commodities  within  a  time  cer- 
tain, it  has  been  held  that  performance  within  the  time  is  a  condition 
precedent  to  the  enforcement  of  the  contract,  and  that  a  failure  in 
this  regard  would  justify  the  aggrieved  party  in  refusing  performance 
at  a  later  day.  Norrington  v.  Wright,  U5  U.  S.  188-203,  6  Sup.  Ct. 
12,  29  h.  Ed.  366. 

This  application  of  the  general  principle  commends  itself  as  just 
and  reasonable,  on  account  of  the  frequent  and  rapid  interchange  and 
use  of  such  commodities  made  necessary  by  the  demands  of  com- 
merce, and  because  such  goods,  if  not  received  in  time  by  the  vendee, 
may  usually  be  sold  to  others  by  the  vendor  at  small  loss,  and  thus 
he  may  himself  measure  the  damages  he  ought  to  suffer  from  his  de- 
lay by  the  difference  in  the  market  value  of  his  goods. 

On  the  other  hand,  it  has  been  held  that  an  express  stipulation  in 
a  contract  for  the  construction  of  a  house,  that  it  should  be  completed 
on  a^ay' certain,  and  that,  in  case  of  failure  to  complete  it  within  the 
time  limited,  the  builder  would  forfeit  $1,000,  would  not  justify  the 
owner  of  the  land  on  which  the  house  was  constructed  in  refusing 
to  accept  it  for  a  breach  of  this  stipulation  when  the  house  was  com- 
pleted shortly  after  the  time  fixed,  nor  even  in  retaining  the  penalty 
stipulated  in  the  contract,  but  that  he  must  perform  his  part  of  the 
contract,  and  that  he  could  retain  from  or  recover  of  the  builder 
the  damages  he  sustained  by  the  delay  and  those  only.  Tayloe  v. 
Sandiford,  7  Wheat.  13,  17,  5  L.  Ed.  384. 

This  application  of  the  general  rule  is  equally  just  and  reasonable. 
The  lumber  and  material  bestowed  on  a  house  by  a  builder  become 
of  little  comparative  value  to  him,  while  they  are  ordinarily  of  much 
greater  value  to  the  owner  of  the  land  on  which  it  stands,  and  to  permit 
the  latter  to  escape  payment  because  his  house  is  completed  a  few  days 
later  than  the  contract  requires  would  result  in  great  injustice  to  the 
contractor,  while  the  rule  adopted  fully  protects  the  owner,  and  does 
no  injustice  to  any  one. 

The  cases  just  referred  to  illustrate  two  well-settled  ,rules  of  law 
which  have  been  deduced  from  this  general  principle,  and  in  accord- 
ance with  which  this  case  must  be  determined.     They  are : 

In  contracts  of  merchants  for  the  sale  and  delivery  or  for  the  man- 
ufacture and  sale  of  marketable  commodities  a  statement  descriptive 
of  the  subject-matter,  or  some  material  incident,  such  as  the  time  of 
shipment,  is  a  condition  precedent,  upon  the  failure  or  nonperform- 
ance of  which  the  party  aggrieved  may  repudiate  the  whole  contract. 
Norrington  v.  Wright,  115  U.  S.  188,  203,  6  Sup.  Ct.  12,  29  L.  Ed. 
366;    Rolling  Mill  v.  Rhodes,  121  U.  S.  255,  261,  7  Sup.  Ct.  882, 


EULES   OF  CONSTRUCTION  353 

30  L.  Ed.  920.  But  in  contracts  for  work  or  skill,  and  the  materials 
upon  which  it  is  to  be  bestowed,  a  statement  fixing  the  time  of  per- 
formance of  the  contract  is  not  ordinarily  of  its  essence,  and  a  failure 
to  perform  within  the  time  stipulated,  followed  by  substantial  per- 
formance after  a  short  delay,  will  not  justify  the  aggrieved  party  in 
repudiating  the  entire  contract,  but  will  simply  give  him  his  action 
for  damages  for  the  breach  of  the  stipulation.  Tayloe  v.  Sandiford, 
7  Wheat.  13,  17,  5  L.  Ed.  384;  Hambly  v.  Railroad  Co.  (C.  C.)  21 
Fed.  541,  544,  554,  557. 

It  only  remains  to  determine  whether  the  contracts  in  the  case  at 
bar  are  the  ordinary  contracts  of  merchants  for  the  manufacture  and 
sale  of  marketable  commodities  or  contracts  for  labor,  skill,  and  mate- 
rials, and  this  is  not  a  difficult  task.  A  contract  to  manufacture  and 
furnish  articles  for  the  especial,  exclusive,  and  peculiar  use  of  another, 
with  special  features  which  he  requires,  and  which  render  them  of 
variie~to  him,  but  useless  and  unsalable  to  others, — articles  whose  chief 
cost  and  value  are  derived  from  the  labor  and  skill  bestowed  upon 
them^' arfdlfiot  from  the  materials  of  which  they  are  made, — is  a  con- 
tract for  work  and  labor,  and  not  a  contract  of  sale.  Engraving  Co. 
v.  Moore,  75  Wis.  170,  172,  43  N.  W.  1124,  6  L.  R.  A.  788,  17  Am. 
St.  Rep.  186;  Goddard  v.  Binney,  115  Mass.  450,  15  Am.  Rep.  112; 
Hinds  V.  Kellogg  (Com.  PI.)  13  N.  Y.  Supp.  922 ;  Turner  v.  Mason, 
65  Mich.  662,  32  N.  W.  846. 

Thus  in  Engraving  Co.  v.  Moore,  supra,  where  the  lithographing 
company  had  contracted  to  manufacture  a  large  quantity  of  engrav- 
ings and  lithographs  for  a  theatrical  manager,  with  special  features, 
useful  to  him  only  during  a  certain  season,  and  they  were  completed 
and  set  aside  in  the  rooms  of  the  lithographer,  and  there  burned  be- 
fore delivery  to  the  manager,  the  court  held  that  the  contract  was 
not  one  for  the  sale  of  personal  property,  but  one  for  work,  skill,  and 
materials,  because  it  was  not  the  materials,  but  the  lithographei's 
work  of  skill,  that  gave  the  value  to  the  finished  advertisements,  and 
was  the  actual  subject-matter  of  the  contract,  and  because  that  work 
and  skill,  while  it  added  the  chief  value  to  the  finished  articles  for  the 
especial  use  of  the  defendant,  made  both  the  articles  and  the  mate- 
rials worthless  for  all  other  purposes. 

The  contracts  in  the  case  we  are  considering  were  not  for  the 
blank  paper  on  which  they  were  finally  impressed;  that  was  of  small 
value  in  proportion  to  the  value  of  the  finished  articles ;  they  were 
not  for  the  sale  of  anything  then  in  existence ;  they  were  for  the  ar- 
tistic skill  and  labor  of  the  employes  of  the  defendant  in  preparing 
the  sketches  and  designs,  transferring  them  upon  stone,  and  finally 
impressing  them  upon  the  pa[)cr  ihc  defendant  was  to  furnish;  and 
they  authorized  the  plaintiff,  without  other  orders  than  the  contracts 
themselves,  and  the  approvals  of  the  designs  and  proofs  there  called 
for,  to  prepare  and  furni.sh  all  the  articles  named  in  the  contracts  and 
TnnocKM.CoNT. — 23 


354  INTERPRETATION  OF  CONTRACT 

to  collect  the  contract  price  therefor.  These  contracts  required  the 
names  of  defendant's  mills  and  its  trade-marks  to  be  so  impressed 
upon  all  these  articles  that  when  they  were  completed  they  were  not 
only  unsalable  to  all  others,  but  worthless  to  plaintiff  for  all  purposes 
but  waste  paper. 

The  contracts  are  evidence  that  on  December  31,  1889,  the  articles 
contracted  for  wouldl  have  been  worth  about  $6,000  to  the  defend- 
ant, and  if  a  few  days  later,  when  they  were  tendered,  they  were 
not  worth  so  much,  the  defendant  may  recover  the  damages  it  suf- 
fered from  the  delay  from  December  31',  1889,  to  the  date  of  the  ten- 
der, in  a  proper  action  therefor,  or  may  have  the  same  allowed  in 
this  action  under  proper  pleadings  and  proofs,  and  no  injustice  will 
result;  while,  if  the  defendant  was  permitted  on  account  of  this  de- 
lay to  utterly  repudiate  the  contract,  the  plaintiff  must  practically  lose 
the  entire  $6,000.  The  contracts  contain  no  stipulation  from  which 
it  can  be  fairly  inferred  that  the  parties  intended  the  time  of  perform- 
ance to  be  even  material ;  indeed,  they  strongly  indicate  the  contrary. 
They  provide  that  a  certain  portion  of  the  articles  shall  be  furnished 
in  two  months,  that  the  remainder  of  the  stationery  and  5,000  hangers 
shall  be  furnished  in  the  course  of  the  year,  and  that  5,000  hangers 
more  and  the  vignette  shall  be  furnished  within  a  reasonable  time 
after  the  proofs  are  approved  by  the  defendant;  there  is  no  stipu- 
lation for  the  payment  of  any  damages  or  the  avoidance  of  the  con- 
tracts on  account  of  a  failure  to  perform  within  any  of  the  times 
stipulated  in  the  contracts,  and  the  parties  themselves  proceeded  so  leis- 
urely thereunder  that  the  first  and  only  adinitted  request  by  the  de- 
fendant for  the  delivery  of  any  of  the  articles  not  delivered  in  August 
was  on  December  16.  1889.  In  Tayloe  v.  Sandiford,  supra,  the  court 
refused  to  permit  the  owner  to  retain  the  $1,000  which  the  house 
builder  had  expressly  agreed  to  pay  if  he  failed  to  complete  the  house 
within  the  time  fixed  in  the  contract.  In  the  absence  of  any  such 
stipulation,  or  any  clearly-expressed  intent  that  time  should  be  mate- 
rial even,  it  would  be  clearly  unjustified  by  the  law  and  inequitable 
to  hold  that  the  plaintiff  is  compelled  to  forfeit  his  entire  contract 
price  on  account  of  this  triflling  delay  that  may  have  been  immaterial 
to  the  defendant,  and,  if  not,  may  be  fully  compensated  in  damages. 

The  result  is  that  these  contracts  were  not  for  the  sale  and  deliv- 
ery, or  the  manufacture  and  delivery,  of  marketable  commodities. 
They  were  contracts  for  artistic  skill  and  labor,  and  the  materials  on 
which  they  were  to  be  bestowed  in  the  manufacture  of  articles  which 
were  not  salable  to  any  one  but  the  defendant  when  completed  be- 
cause impressed  with  special  features  useful  only  to  it.  There  was 
nothing  in  the  contracts  or  their  subject-matter  indicating  any  in- 
tention of  the  parties  that  the  stipulations  as  to  time  should  be  deemed 
of  their  essence ;  and  the  defendant  was  not  justified  on  account  of 
the  slight  delay  disclosed  by  the  record  in  refusing  to  accept  the  goods, 
or  in  repudiating  the  entire  contract. 


RULES   OF   CONSTRUCTION  355 

This  conclusion  disposes  of  the  case,  and  it  is  unnecessary  to  notice 
other  errors  assigned.  The  judgment  below  is  reversed,  and  the 
cause  remanded  for  further  proceedings  not  inconsistent  with  this 
opinion. 


3.  Rules  as  to  Penalties  and  Liquidated  Damages 


JAQUITH  V.  HUDSON. 
(Supreme  Court  of  Michisan,  1S5S.    5  Mich.  123.) 

The  action  was  by  Jaquith  against  Hudson,  upon  a  promissory  note 
for  one  thousand  dollars,  given  by  the  latter  to  the  former,  April  15th, 
1855,  and  payable  twelve  months  after  date.  Defendant  pleaded  the 
general  issue,  and  gave  notice  that  on  the  trial  he  would  prove  that, 
previous  to  said  15th  day  of  April,  1855,  plaintiff  and  defendant  had 
been  and  were  partners  in  trade,  at  Trenton,  in  said  county  of  Wayne, 
under  the  name  of  Hudson  &  Jaquith ;  that,  on  that  day  the  copartner- 
ship was  dissolved,  and  the  parties  then  entered  into  an  agreement,  of 
which  the  following  is  a  copy : 

"This  article  of  agreement,  made  and  entered  into  between  Austin 
E.  Jaquith,  of  Trenton,  Wayne  county,  and  state  of  Michigan,  of  the 
first  part,  and  Jonathan  Hudson,  of  Trenton,  county  of  Wayne,  and 
state  of  Michigan  of  the  second  part,  witnesseth,  that  the  said  Austin 
E.  Jaquith  agrees  to  sell,  and  by  these  presents  does  sell  and  convey 
unto  the  said  Jonathan  Hudson,  his  heirs  and  assigns,  all  his  right, 
title,  and  interest  in  the  stock  of  goods  now  owned  by  the  firm  of  Hud- 
son &  Jaquith,  together  with  all  the  notes,  books,  book  accounts, 
moneys,  deposits,  debts,  dues,  and  demands,  as  well  as  all  assets 
that  in  anywise  belong  to  the  said  firm  of  Hudson  &  Jaquith;  and 
that  the  copartnership  that  has  existed  between  the  said  firm  of  Hud- 
son &  Jaquith  is  hereby  dissolved ;  and  that  the  said  Austin  E.  Jaquith, 
by  these  presents,  agrees  that  he  will  not  engage  in  the  mercantile 
business,  in  Trenton,  for  himself,  or  in  connection  with  any  other  one, 
for  the  space  of  three  years  from  this  date,  upon  the  forfeiture  of  the 
sum  01  one  thousand  dollars,  to  be  collected  by  the  said  Hudson  as 
his  damages. 

"In  consideration  whereof,  the  said  Jonathan  Hudson,  of  the  sec- 
ond part,  agrees  for  himself,  his  heirs  and  administrators,  to  pay  unto 
the  said  Austin  E.  Jaquith  the  sum  of  nine  hundred  dollars,  for  nis 
services  in  the  firm  of  Hudson  &  Jaquith,  together  with  all  the  money 
that  he   (the  said  Austin  E.  Jaquith)   paid  into  said  firm,  deducting 


356  INTERPRETATION  OF  CONTRACT 

therefrom  the  amount  which  he  (the  said  Austin  E.  Jaquith)  has 
drawn  from  said  firm ;  the  remainder  the  said  Hudson  agrees  to  pay 
to  the  said  Jaquith,  his  heirs  or  assigns,  at  a  time  and  in  a  manner  as 
shall  be  specified  in  a  note  bearing  even  date  with  these  presents.  And 
the  said  Hudson,  for  himself,  his  heirs  and  assigns,  agrees  to  pay  all 
the  debts,  notes  and  liabilities  of  the  firm  of  Hudson  &  Jaquith,  and 
to  execute  unto  the  said  Jaquith  a  good  and  sufficient  bond  of  indem- 
nification against  all  claims,  debts,  or  liabilities  of  the  firm  of  Hud- 
son &  Jaquith. 

"Trenton,  April,  1855.  Austin  E.  Jaquith.     [L.  S.] 

"Jonathan  Hudson.  [L.  S.] 
"Witness :  Arthur  Edwards.  Arthur  Edwards,  Jr." 
And  defendant  further  gave  notice,  among  other  things,  that  he 
would  show,  on  the  trial,  that,  after  the  execution  of  said  agreement 
in  writing,  and  the  giving  of  said  note  in  pursuance  thereof,  on  or 
about  the  15th  day  of  July,  1855,  plaintiff,  in  violation  of  said  agree- 
ment, entered  into  the  mercantile  business  at  Trenton,  and  had  con- 
tinued to  carry  on  the  same  ever  since;  by  means  whereof  the  con- 
sideration of  said  note  had  failed.  And  he  further  gave  notice,  that 
he  (the  defendant)  continued  to  carry  on  the  mercantile  business  at 
Trenton,  after  the  dissolution  of  said  copartnership ;  and  by  means  of 
the  breach  of  said  articles  by  plaintiff,  defendant  had  sustained  dam- 
ages to  the  sum  of  one  thousand  dollars,  liquidated  by  said  articles 
for' a  breach  thereof,  which  sum  he  would  claim  to  have  deducted 
from  the  amount  of  said  note,  on  the  trial.     *     *     ♦ 

The  court  was  then  asked  by  plaintiff's  counsel  to  charge  the  jury, 
as  follows :  *  *  *  "2.  That,  even  if  the  agreement  set  up  was,  in 
the  opinion  of  the  jury,  properly  delivered,  as  between  the  parties,  the 
defendant  can  not  recoup  any  damages  against  the  plaintiff,  except 
upon  evidence  showing  that  some  damage  was  actually  sustained  by 
him ;  that  the  clause  in  the  agreement  as  to  damages,  can  not,  of  itself, 
and  in  the  absence  of  evidence,  operate  to  the  reduction  of  the  claim 
of  the  plaintiff,  as  the  sum  fixed  in  the  agreement  is__in  the  nature  of 
a  penalty,  and  not  liquidated  damages ;  and  no  damages  can  be  recov- 
ered under  it  except  such  as  are  proven."  The  court  refused  so  to 
charge;    and  plaintiff  excepted.     *     *     ♦ 

The  court  charged  the  jury,  that  it  was  not  necessary  for  the  de- 
fendant to  prove  any  actual  damage  under  the  plaintiff's  breach  of 
the  said  agreement,  as  the  damages  therein  fixed  were  liquidated  dam- 
ages, and  not  a  penalty. 

The  issue  was  then  submitted  to  the  jury  on  the  evidence,  who 
found  a  verdict  for  the  plaintiff,  in  the  sum  of  eighteen  dollars  and 
eight  cents,  allowing  the  defendant  the  sum  of  one  thousand  dollars 
mentioned  in  the  agreement. 

Plaintiff  brought  the  case  to  this  court,  by  writ  of  error,  accompa- 
nied by  bill  of  exceptions. 


RULES   OF   CONSTRUCTION  357 

Christiancy,  J.*  *  *  *  The  second  exception  raises  the  single 
question,  whether  the  sum  of  $1,000,  mentioned  in  the  covenant  of 
Jaquith  not  to  go  into  business  in  Trenton,  is  to  be  construed  as  a 
penalty,  or  as  stipulated  damages — the  plaintiff  in  error  insisting  it 
should  be  construed  as  the  former,  the  defendant  as  the  latter. 

We  shall  not  attempt  here  to  analyze  all  the  decided  cases  upon  the 
subject,  which  were  read  and  cited  upon  the  argument,  and  which, 
with  others,  have  been  examined.  It  is  not  to  be  denied  that  there 
is  some  conflict,  and  more  confusion,  in  the  cases ;  judges  have  been 
long  and  constantly  complaining  of  the  confusion  and  want  of  har- 
mony in  the  decisions  upon  this  subject.  But,  while  no  one  can  fail 
to  discover  a  very  great  amount  of  apparent  conflict,  still  it  will  be 
found,  on  examination,  that  most  of  the  cases,  however  conflicting  in 
appearance,  have  yet  been  decided  according  to  the  justice  and  equity 
of  the  particular  case.  And  while  there  are  some  isolated  cases  (and 
they  are  but  few),  which  seem  to  rest  upon  no  very  intelligible  prin- 
ciple, it  will  be  found,  we  think,  that  the  following  general  principles 
may  be  confidently  said  to  result  from,  and  to  reconcile,  the  great  ma- 
jority of  the  cases,  both  in  England  and  in  this  country : 

First.  The  law,  following  the  dictates  of  equity  and  natural  justice, 
in  cases  of  this  kind,  adopts  the  principle  of  just  compensation  for  the 
loss  of  injury  actually  sustained;  considering  it  no  greater  violation 
of  this  principle  to  confine  the  injured  party  to  the  recovery  of  less, 
than  to  enable  him,  by  the  aid  of  the  court  to  extort  more.  It  is  the 
application,  in  a  court  of  law,  of  that  principle  long  recognized  in 
courts  of  equity,  which,  disregarding  the  penalty  of  the  bond,  gives 
only  the  damages  actually  sustained.  This  principle  may  be  stated, 
in  other  words,  to  be,  that  courts  of  justice  will  not  recognize  or  en- 
force a  contract,  or  any  stipulation  of  a  contract,  clearly  unjust  and 
unconscionable ;  a  principle  of  common  sense  and  common  honesty 
so  obviously  in  accordance  with  the  dictates  of  justice  and  sound 
policy  as  to  make  it  rather  matter  of  surprise  that  courts  of  law  had 
not  always,  and  in  all  cases,  adopted  it  to  the  same  extent  as  courts  of 
equity.  And,  happily  for  the  purposes  of  justice,  the  tendency  of 
courts  of  law  seems  now  to  be  towards  the  full  recognition  of  the 
principle,  in  all  cases. 

This  principle  of  natural  justice,  the  courts  of  law,  following  courts 
of  equity,  have,  in  this  class  of  cases,  adopted  as  the  law  of  the  con- 
tract; and  they  will  not  permit  the  parties  by  express  stipulation,  or 
any  form  of  language,  however  clear  the  intent,  to  set  it  aside ;  on 
the  familiar  ground,  "conventus  privatorum  non  potest  publico  jiiri 
derogare." 

But  the  court  will  apply  this  principle,  and  disregard  the  express 
stipulation  of  parties,  only  in   those  cases  where  it  is  obvious   from 

*  The  statement  of  fattH  Is  abiidjjed,  and  u  iiortlon  of  Lbe  opinlou  la 
omitted. 


358  INTERPRETATION  OF  CONTRACT 

the  contract  before  them,  and  the  whole  subject-matter,  that  the  prin- 
ciple of  compensation  has  been  disregarded,  and  that  to  carry  out  the 
express  stipulation  of  the  parties,  would  violate  this  principle,  which 
alone  the  court  recognizes  as  the  law  of  the  contract. 
«  The  violation,  or  disregard,  of  this  principle  of  compensation,  may 
appear  to  the  court  in  various  ways — from  the  contract,  the  sum 
mentioned,  and  the  subject-matter.  Thus,  where  a  large  sum  (say 
one  thousand  dollars)  is  made  payable  solely  in  consequence  of  the 
non-payment  of  a  much  smaller  sum  (say  one  hundred  dollars),  at  a 
certain  day;  or  where  the  contract  is  for  the  performance  of  several 
stipulations  of  very  different  degrees  of  importance,  and  one  large 
sum  is  payable  on  the  breach  of  any  one  of  them,  even  the  most  triv- 
ial, the  damages  for  which  can,  in  no  reasonable  probability,  amount 
to  that  sum ;  in  the  first  case,  the  court  must  see  that  the  real  damage 
is  readily  computed,  and  that  the  principle  of  compensation  has  been 
overlooked,  or  purposely  disregarded ;  in  the  second  case,  though 
there  may  be  more  difficulty  in  ascertaining  the  precise  amount  of 
damage,  yet,  as  the  contract  exacts  the  same  large  sum  for  the  breach 
of  a  trivial  or  comparatively  unimportant  stipulation,  as  for  that  of 
the  most  important,  or  of  all  of  them  together,  it  is  equally  clear  that 
the  parties  have  wholly  departed  from  the  idea  of  just  compensation, 
and  attempted  to  fix  a  rule  of  damages  which  the  law  will  not  rec- 
ognize or  enforce. 

We  do  not  mean  to  say  that  the  principle  above  stated  as  deducible 
from  the  cases,  is  to  be  found  generally  announced  in  express  terms, 
in  the  language  of  the  courts;  but  it  will  be  found,  we  think,  to  be 
necessarily  implied  in,  and  to  form  the  only  rational  foundation  for, 
all  that  large  class  of  cases  which  have  held  the  sum  to  be  in  the  na- 
ture of  a  penalty,  notwithstanding  the  strongest  and  most  explicit 
declarations  of  the  parties  that  it  was  intended  as  stipulated  and  as- 
certained damages. 

It  is  true,  the  courts  in  nearly  all  these  cases  profess  to  be  constru- 
ing the  contract  with  reference  to  the  intention  of  the  parties,  as  if 
for  the  purpose  of  ascertaining  and  giving  effect  to  that  intention ; 
yet  it  is  obvious,  from  these  cases,  that  wherever  it  has  appeared  to 
the  court,  from  the  face  of  the  contract  and  the  subject-matter,  that 
the  sum  was  clearly  too  large  for  just  compensation,  here,  while  they 
will  allow  any  form  of  words,  even  those  expressing  the  direct  con- 
trary, to  indicate  the  intent  to  make  it  a  penalty,  yet  no  form  of 
words,  no  force  of  language,  is  competent  to  the  expression  of  the 
opposite  intent.  Here,  then,  is  an  intention  incapable  of  expression 
in  words ;  and  as  all  written  contracts  must  be  expressed  in  words, 
it  would  seem  to  be  a  mere  waste  of  time,  and  effort  to  look  for  such 
an  intention  in  such  a  contract.  And  as  the  question  is  between  two 
opposite  intents  only,  and  the  negation  of  the  one  necessarily  implies 
the  existence  of  the  other,  there  would  seem  to  be  no  room  left  for 
construction  with  reference  to  the  intent.    It  must,  then,  be  manifest 


KULES   OF   CONSTEUCTION  359 

that  the  intention  of  the  parties  in  such  cases  is  not  the  governing  con- 
sideration. 

But  some  of  the  cases  attempt  to  justify  this  mode  of  construing 
the  contract  with  reference  to  the  intent,  by  declaring,  in  substance, 
that  though  the  language  is  the  strongest  which  could  be  used  to 
evince  the  intention  in  favor  of  stipulated  damages,  still,  if  it  appear 
clearly,  by  reference  to  the  subject-matter,  that  the  parties  have  made 
the  stipulation  without  reference  to  the  principle  of  just  compensa- 
tion, and  so  excessive  as  to  be  out  of  all  proportion  to  the  actual  dam- 
age, the  court  must  hold  that  they  could  not  have  intended  it  as  stip- 
ulated damages,  though  they  have  so  expressly  declared.  See,  as  an 
example  of  this  class  of  cases,  Kemble  v.  Farren,  6  Bing.  141. 

Now  this,  it  is  true,  may  lead  to  the  same  result  in  the  particular 
case,  as  to  have  placed  the  decision  upon  the  true  ground,  viz.,  tnat 
though  the  parties  actually  intended  the  sum  to  be  paid,  as  the  dam- 
ages agreed  upon  between  them,  yet  it  being  clearly  unconscionable, 
the  court  would  disregard  the  intention,  and  refuse  to  enforce  the 
stipulation.  But,  as  a  rule  of  construction,  or  interpretation  of  con- 
tracts, it  is  radically  vicious,  and  tends  to  a  confusion  of  ideas  m  the 
construction  of  contracts  generally.  It  is  this,  more  than  anything 
else,  which  has  produced  so  much  apparent  conflict  in  the  decisions 
upon  this  whole  subject  of  penalty  and  stipulated  damages.  It  sets 
at  defiance  all  rules  of  interpretation,  by  denying  the  intention  of  the 
parties  to  be  what  they,  in  the  most  unambiguous  terms,  have  dsclared 
it  to  be,  and  finds  an  intention  directly  opposite  to  that  which  is 
clearly  expressed — "divinatio,  non  interpretatio  est,  quae  omnino  re- 
cedit  a  litera." 

Again,  the  attempt  to  place  this  question  upon  the  intention  of  the 
parties,  and  to  make  this  the  governing  consideration,  necessarily  im- 
plies that,  if  the  intention  to  make  the  sum  stipulated  damages  should 
clearly  appear,  the  court  would  enforce  the  contract  according  to  that 
intention.  To  test  this,  let  it  be  asked,  whether,  in  such  a  case,  if  it 
were  admitted  that  the  parties  actually  intended  the  sum  to  be  con- 
sidered as  stipulated  damages,  and  not  as  a  penalty,  would  a  court  of 
law  enforce  it  for  the  amount  stipulated?  Clearly,  they  could  not, 
without  going  back  to  the  technical  and  long  exploded  doctrine  which 
gave  the  whole  penalty  of  the  bond,  without  reference  to  the  damages 
actually  sustained.  They  would  thus  be  simply  changing  the  names 
of  things,  and  enforcing,  under  the  name  of  stipulated  damages,  what 
in  its  own  nature  is  but  a  penalty. 

The  real  question  in  this  class  of  cases  will  be  found  to  be,  not  what 
the  parties  intended,  but  whether  the  sum  is,  in  fact,  in  the  nature  of 
a  penalty;  and  this  is  to  be  determined  by  the  magnitude  of  the  sum, 
in  connection  with  the  subject-matter,  and  not  at  all  by  the  words  or 
the  understanding  of  the  parties.  The  intention  of  the  parlies  can 
not  alter  it.  While  courts  of  law  gave  the  penalty  of  the  bond,  the 
parties  intended  the  payment  of  the  penalty  as  much  as  they  now  in- 


360  INTERPRETATION  OF  CONTRACT 

tend  the  payment  of  stipulated  damages ;  it  must,  therefore,  we  think, 
be  very  obvious  that  the  actual  intention  of  the  parties,  in  this  class 
of  cases,  and  relating  to  this  point,  is  wholly  immaterial ;  and  though 
the  courts  have  very  generally  professed  to  base  their  decisions  upon 
the  intention  of  the  parties,  that  intention  is  not,  and  can  not  be  made, 
the  real  basis  of  these  decisions.  In  endeavoring  to  reconcile  their 
decisions  with  the  actual  intention  of  the  parties,  the  courts  have 
sometimes  been  compelled  to  use  language  wholly  at  war  with  any 
Idea  of  interpretation,  and  to  say  "that  the  parties  must  be  considered 
as  not  meaning  exactly  what  they  say."  Homer  v.  Flintoff,  9  Mees. 
&  W.,'  per  Park,  B.  May  it  not  be  said,  with  at  least  equal  propriety, 
that  the  courts  have  sometimes  said  what  they  did  not  exactly  mean? 

The  foregoing  remarks  are  all  to  be  confined  to  that  class  of  cases 
where  it  was  clear,  from  the  sum  mentioned  and  the  subject-matter, 
that  the  principle  of  compensation  had  been  disregarded. 

But,  secondly,  there  are  great  numbers  of  cases,  where,  from  the 
nature  of  the  contract  and  the  subject-matter  of  the  stipulation,  for 
the  breach  of  which  the  sum  is  provided,  it  is  apparent  to  the  court 
that  the  actual  damages  for  a  breach  are  uncertain  in  their  nature, 
difficult  to  be  ascertained,  or  impossible  to  be  estimated  with  certainty, 
by  reference  to  any  pecuniary  standard,  and  where  the  parties  them- 
selves are  more  intimately  acquainted  with  all  the  peculiar  circum- 
stances, and  therefore  better  able  to  compute  the  actual  or  probable 
damages,  than  courts  or  juries,  from  any  evidence  which  can  be 
brought  before  them.  In^all  such  cases,  the  law  permits  the  parties 
to  ascertain  for  themselves,  and  to  provide  in  the  contract  itself,  the 
amount  of  the  damages  which  shall  be  paid  for  the  breach.  In  per- 
mitting this,  the  law  does  not  lose  sight  of  the  principle  of  compen- 
sation, which  is  the  law  of  the  contract,  but  merely  adopts  the  com- 
putation or  estimate  of  the  damages  made  by  the  parties,  as  being  the 
best  and  most  certain  mode  of  ascertaining  the  actual  damage,  or 
what  sum  will  amount  to  a  just  compensation.  The  reason,  there- 
fore, for  allowing  the  parties  to  ascertain  for  themselves  the  damages 
in  this  class  of  cases,  is  the  same  which  denies  the  right  in  the  former 
class  of  cases;  viz.,  the  courts  adopt  the  best  and  most  practicable 
mode  of  ascertaining  the  sum  which  will  produce  just  compensation. 

In  this  class  of  cases  where  the  law  permits  the  parties  to  ascer- 
tain and  fix  the  amount  of  damages  in  the  contract,  the  first  inquiry 
obviously  is,  whether  they  have  done  so  in  fact?  And  here,  the  in- 
tention of  the  parties  is  the  governing  consideration;  and  in  ascer- 
taining this  intention,  no  merely  technical  effect  will  be  given  to  the 
particular  words  relating  to  the  sum,  but  the  entire  contract,  the  sub- 
ject-matter, and  often  the  situation  of  the  parties  with  respect  to  each 
other  and  to  the  subject-matter,  will  be  considered.  Thus  though  the 
word  "penalty"  be  used  (Sainter  v.  Fergason,  7  Man.,  G.  &  S.  716; 
Jones  V.  Green,  3  Younge  &  J.  299;  Pierce  v.  Fuller,  8  Mass.  223, 
5  Am.  Dec.  102),  or  "forfeit"  (Nobles  v.  Bates,  7  Cow.  [N.  Y.]  307), 


EULES   OF   CONSTRUCTION  361 

or  "forfeit  and  pay"  (Fletcher  v.  Dycke,  2  Term  R.  32),  it  will  still 
be  held  to  be  stipulated  damages,  if,  from  the  whole  contract,  the  sub- 
ject-matter, and  situation  of  the  parties,  it  can  be  gathered  that  such 
was  their  intention.  And  in  proportion  as  the  difficulty  of  ascertain- 
ing the  actual  damage  by  proof  is  greater  or  less,  where  this  difficulty 
grows  out  of  the  nature  of  such  damages,  in  the  like  proportion  is  the 
presumption  more  or  less  strong  that  the  parties  intended  to  fix  the 
amount. 

It  remains  only  to  apply  these  principles  to  the  case  before  us.  It 
is  contgnded  by  the  plaintiff  in  error^jtjiat  the  j)ayment  of  the  one 
thousand  dollars  mentioned  in  the  covenant  of  Jaquith  is  not  made 
dependeht  solely  upon  the  breach  of  the  stipulation  not  to  go  into 
business  in  Trenton,  but  that  it  applies  equally — First,  to  the  agree- 
ment to  sell  to  Hudson  his  interest  in  the  goods;  second,  to  sell  his 
interest  in  the  books,  notes,  accounts,  etc.;  and,  third,  to  the  agree- 
ment to  dissolve  the  partnership.  But  we  can  perceive  no  ground 
for  such  a  construction.  The  language  in  reference  to  the  sale  of 
the  interest  in  the  goods,  books,  notes,  accounts,  etc.,  and  that  in  ref- 
erence to  the  dissolution,  is  not  that  of  a  sale  in  futuro,  nor  for  the 
dissolution  of  the  partnership  at  a  future  period,  but  it  is  that  of  a 
present  sale  and  a  present  dissolution — "does  hereby  sell,"  and  "the 
copartnership  is  hereby  dissolved,"  is  the  language  of  the  instrument. 

It  is  plain,  from  this  language,  from  the  subject-matter,  and  from 
all  the  acts  o£  the  parties,  that  these  provisions  were  to  take,  and  did 
ta*t' ,  imiricdiaie  effect.  There  could  be  no  possible  occasion  to  pro- 
vide ai'^  puialvj'  or  stipulated  damages  for  the  non-performance  of 
these  stipulations,  because  this  sale  and  dissolution  would  already 
hive  been  accomplished  the  moment  the  contract  took  effect  for  any 
purp'jS(i:  and,  until  it  took  effect,  the  stipulation  for  the  one  thousand 
dollar?  could  not  take  effect  or  afford  any  security,  nor  would  Hudson 
be  bcijr.d  oi  need  the  security.  But  it  remained  to  provide  for  the 
futUTL.  If  Jaquith  were  to  be  at  liberty  to  set  up  a  rival  store  in  the 
same  villageTlriTriglTt  seriously  affect  the  success  of  Hudson's  busi- 
ness: and  we  are  bound  to  infer,  from  the  whole  scope  of  this  con- 
tract, that  Hudson  would  never  have  agreed  to  pay  the  considera- 
tior.  mentioned  in  it,  nor  to  have  entered  into  the  contract  at  all,  but 
for  the  stipulation  of  Jaquith  "that  he  will  not  engage  in  the  mer- 
cantile business  in  Trenton,  for  himself  or  in  connection  with  any 
cthelTcrieV  for  the  space  of  three  years  from  this  date,  upon  the  for- 
feiture of  the  sum  of  one  thousand  dollars,  to  be  collected  by  said 
Hudson  as  his  damages."  This  stipulation  of  Jaquith  not  to  go  into 
business,  is  the  only  one  on  his  part  which  looks  to  the  future;  and 
it  is  to  this,  alone,  that  the  language  in  reference  to  the  one  thousand 
dollars  applies.  Any  other  construction  would  do  violence  to  the  lan- 
guage, and  be  at  war  with  the  whole  subject  matter. 

The  damages  to  arise  from  the  breach  of  this  covenant,  from  the 
nature  of  the  case,  must  be  not  only  uncertain   in   their  nature,  but 


362  INTERPRETATION  OF  CONTRACT 

impossible  to  be  exhibited  in  proof,  with  any  reasonable  degree  of 
accuracy,  by  any  evidence  which  could  possibly  be  adduced.  It  is 
easy  to  see  that  while  the  damages  might  be  very  heavy,  it  would  be 
very  difficult  clearly  to  prove  any.  Their  nature  and  amount  could 
be  better  estimated  by  the  parties  themselves,  than  by  witnesses, 
courts,  or  juries.  It  is,  then,  precisely  one  of  that  class  of  cases  in 
which  it  has  always  been  recognized  as  peculiarly  appropriate  for  the 
parties  to  fix  and  agree  upon  the  damages  for  themselves.  In  such 
a  case,  the  language  must  be  very  clear' to  the  contrary,  to  overcome 
the  inference  of  intent  (so  to  fix  them),  to  be  drawn  from  the  sub- 
ject-matter and  the  situation  of  the  parties;  because,  it  is  difficult  to 
suppose,  in  such  a  case,  that  the  party  taking  the  stipulation  intended 
it  only  to  cover  the  amount  of  damages  actually  to  be  proved,  as  he 
would  be  entitled  to  the  latter  without  the  mention  of  any  sum  in  the 
contract,  and  he  must  also  be  supposed  to  know  that  his  actual  dam- 
ages, from  the  nature  of  the  case,  are  not  susceptible  of  legal  proof 
to  anything  approaching  their  actual  extent. 

That  the  parties  actually  intended,  in  this  case,  to  fix  the  amount  to 
be  recovered,  is  clear  from  the  language  itself,  without  the  aid  of  a 
reference  to  the  subject-matter,  "upon  the  forfeiture  of  the  sum  of 
one  thousand  dollars,  to  be  collected  by  the  said  Hudson  as  his  dam- 
ages." It  is  manifest  from  this  language  that  it  was  intended  Hudson 
should  "collect,"  or,  in  other  words,  receive  this  amount,  and  that  it 
should  be  for  his  damages  for  the  breach  of  the  stipulation.  This 
language  is  stronger  than  "forfeit  and  pay,"  or  "under  the  penalty 
of,"  as  these  might  be  supposed  to  have  reference  to  the  form  of  the 
penal  part  of  a  bond,  or  to  the  form  of  action  upon  it,  and  not  to  the 
actual  "collection"  of  the  money. 

It  is,  therefore,  very  clear,  from  every  view  we  have  been  able  to 
take  of  this  case,  that  it  was  competent  and  proper  for  the  parties 
to  ascertain  and  fix  for  themselves  the  amount  of  damages  for  the 
breach  complained  of,  and  equally  clear  that  they  have  done  so  in 
fact.  From  the  uncertain  nature  of  the  damages,  we  cannot  say  that 
the  sum  in  this  case  exceeds  the  actual  damages,  or  that  the  principle 
of  compensation  has  been  violated.  Indeed,  it  would  have  been  per- 
haps difficult  to  discover  a  violation  of  this  principle  had  the  sum  in 
this  case  been  more  than  it  now  is,  though,  doubtless,  even  in  such 
cases  as  the  present,  if  the  sum  stated  were  so  excessive  as  clearly  to 
exceed  all  reasonable  apprehension  of  actual  loss  or  injury  for  the 
breach,  we  should  be  compelled  to  disregard  the  intention  of  the  par- 
ties, and  treat  the  sum  only  as  a  penalty  to  cover  the  actual  damages 
to  be  exhibited  in  proof.  In  this  case  the  party  must  be  held  to  the 
amount  stipulated  in  his  contract. 

The  second  exception,  therefore,  is  not  well  taken ;  the  court  prop- 
erly refused  to  charge  as  requested,^  and  no  error  appearing  in  the 
record,  the  judgment  of  the  circuit  court  for  the  county  of  Wayne 
must  be  affirmed.    The  other  justices  concurred. 


.y-.^/^^  i^..,.^  -^^^^^^^'^^  ^^^  ^^^^  '-^-^  ^^-^^  ^- 

,     ,  ^^  '  DISCHAROB  OF  CONTRACT  dtw  - 

-^'—^  ^'--nSlSCHARGE  OF  CONTRACT        _  ^,.  7-, 

L>uu^c^^  I.  Discharge  of  Contract  by  Agreement '  ^^  .u^jZ::^:^^ 

yT:i:*  ^    !•  Waiver,  Cancellation,  or  Rescission   /.jjjr^ X^    »t>-^ 

-  ^  ^  /.  — i^^^  -^         KELLETT  v.  ROBIE. 

(Supreme  Court  of  Wisconsin.   1898.     99   Wis.  303,  74  N.  W.  781.) 

Action  by  Harriet  Kellett  against  Fred  H.  Robie.  Judgment  for 
plaintiff.     Defendant  appeals. 

WiNSLOW,  J.  This  is  an  action  for  breach  of  promise  of  marriage, 
and  the  plaintiff  has  obtained  a  judgment  for  damages  fixed  at  $3,500. 
The  contract  of  marriage  was  admitted,  but  the  defendant  claimed 
that  there  was  a  subsequent  mutual  release.  This  was  denied  by  the 
plaintiff,  and  upon  this  issue  the  case  was  tried. 

The  evidence  showed  that  the  parties  became  engaged  August  30, 
1890,  the  plaintiff  then  being  twenty  years  of  age;  and  it  was  agreed 
that  the  marriage  should  not  take  place  for  three  years.  The  parties 
were  farmers'  children,  and  lived  with  their  parents  in  adjoining 
towns  in  Winnebago  county,  about  a  mile  and  a  half  from  each  other. 
After  the  engagement,  the  defendant  frequently  called  upon  the  plain- 
tiff until  December  17,  1893,  at  which  time  the  defendant  claims  that 
the  plaintiff  suggested  to  him  that,  as  long  as  his  (defendant's)  people 
were  opposed  to  the  match,  they  should  separate,  and  call  the  engage- 
ment'off,  and  that  he  assented  to  this  proposition.  The  defendant 
never  called  on  the  plaintiff  after  this  time,  although  they  had  some 
correspondence,  which  is  in  the  record.  Soon  after  this  alleged  con- 
versation, the  defendant  commenced  to  call  upon  another  young  lady 
in  the  neighborhood,  and  continued  to  pay  attention  to  her  without 
objection  on  the  part  of  the  plaintiff,  until  he  was  married  to  her  in 
December,  1895. 

The  plaintiff  denied  positively  that  she  released  the  defendant  from 
the  engagement.  It  the  course  of  her  examination  as  a  party  under 
section  4096,  Rev.  St..  she  admitted  that  they  had  a  conversation  in 
December,  1893,  in  which  she  says,  "I  told  him  if  he  did  not  want  to 
marry  me  of  course  he  could  suit  himself ;  but  he  said  he  was  marry- 
ing me,  not  his  people,  and  he  came  to  see  me  just  the  same."  The 
evidence  showed  that  the  defendant  was  worth  about  $6,000,  com- 
posed of  his  interest  in  the  estates  of  his  father  and  grandfather, 
both  of  which  were  still  unsettled. 

1  For  (llscus.siou  of  printiulea,  see  Clark  on  Contracts  (2d  Ed.)  S§  21^7  • 
230,  232. 


364  DISCHARGE  OF  CONTRACT 

Several  exceptions  to  rulings  upon  evidence  and  to  the  charge  of 
the  court  were  argued  by  the  appellant,  but,  as  we  dio  not  think  we 
should  be  compelled  to  reverse  the  judgment  on  account  of  them 
alone,  we  shall  not  discuss  them,  but  proceed  to  the  main  question, 
namely,  whether  the  verdict  is  contrary  to  the  evidence.  Upon  this 
question,  after  careful  consideration  of  all  the  evidence,  and  especially 
of  the  letters  written  by  the  plaintiff  after  the  alleged  release,  we 
can  come  to  no  conclusion  except  that  the  verdict  is  clearly  against 
the  preponderance  of  the  evidence.  Tl)ese  letters  demonstrate  to  a 
certainty  that  something  of  a  serious  nature  had  interrupted  the  re- 
lations of  the  parties  about  the  time  that  the  defendant  alleges  the  re- 
lease took  place.  No  explanation  as  to  what  this  serious  event  was 
is  offered  except  the  defendant's  explanation  of  a  release. 

We  shall  not  give  the  letters  in  full,  but  content  ourselves  with 
some  extracts,  which  seem  to  conclusively  establish  that  the  former 
relationship  was  broken  off,  and  that  marriage  was  no  longer  con- 
templated. 

In  a  letter  of  January  21,  1894,  she  says:  "Fred:  If  you  desire 
a  change,  why  take  it,  and  end  the  matter  right  here.  As  I  said 
previously,  I  cannot  count  second.  I  am  glad  of  one  thing;  if  we 
do  separate  forever  you  can  always  think  that  I  performed  my  duty 
by  you  from  the  very  first  to  the  last." 

On  March  1,  1894,  she  wrote:  "Fred:  You  may  think  it  queer 
on  my  part  in  asking  you  to  come  and  see  me,  after  what  has  hap- 
pened. I  would  never  do  so  if  it  were  not  absolutely  necessary,  Fred; 
that  you  know.  I  know  it  will  cause  hard  feelings,  but  I  cannot  help 
it.  You  must  know,  and  the  sooner  the  better.  So  let  me  see  you  as 
soon  as  possible.  If  I  have  done  wrong  in  writing,  please  forgive  me, 
Fred ;  it  is  for  your  and  my  welfare." 

On  March  8,  1894,  she  wrote  again:  "I  just  want  you  to  come  just 
once,  and  risk  everything  to  oblige  me.  Your  trouble  is  as  nothing 
compared  to  mine.  I  knew  you  were  in  town  Monday.  I  seen  your 
horse,  andl  some  way  I  felt  you  were  there.  I  don't  feel  hard  toward 
you  one  bit,  Fred,  You  will  find  me  just  the  same.  I  am  not  fickle; 
once  is  forever  with  me ;  so  don't  feel  bad  about  nothing.  You  shall 
never  suffer  through  me  again.  I  hope  the  day  may  come  when  you 
forget  that  you  ever  knew  me.  ♦  *  *  Now,  Fred,  if  you  don't 
want  to  come,  and  if  you  think  you  will  be  happier  by  staying  away, 
why  I  will  try  and  bear  it." 

When  the  plaintiff  said  to  the  dlefendant  in  her  letter  of  January 
21st,  "If  you  desire  a  change,  take  it,  and  end  the  matter  right  here," 
we  can  see  no  escape  from  the  conclusion  that  it  was  an  offer  of  free- 
dom from  the  engagement ;  and  when  it  further  appears  that  the  de- 
fendant acted  upon  this  or  a  similar  offer,  and,  without  objection  from 
the  plaintiff,  but  with  her  knowledge,  courted  and  married  another 
woman,  it  must  be  considered  that  the  offer  was  accepted  and  that 
the  plaintiff  has  become  bound  by  the  offer  and  its  acceptance.     We 


DISCHAEQE   OF   CONTRACT  BY   AGREEMENT  365/ 

are  unable  to  understand  how,  in  the  face  of  this  evidence,  the  jury 
could  have  found  that  there  vi^as  not  a  mutual  release  of  the  engage- 
ment. 

In  connection  with  this  unaccountable  verdict,  we  cannot  refrain 
from  saying  that  the  damages  awarded  are  grossly  excessive,  and  that 
we  should  feel  obliged  to  reverse  upon  this  ground  in  any  event.  The 
defendant's  estate  amounted  to  about  $6,000,  and  there  are  no  cir- 
cumstances of  aggravation  in  the  case.  The  defendant  is  now  mar- 
ried, and  to  give  considerably  more  than  half  of  his  property  as  dam- 
ages upon  the  facts  appearing  here,  even  if  there  had  been  no  ex- 
press release,  we  regard  as  out  of  the  bounds  of  reason.  The  dam- 
ages are  so  far  excessive  as  to  show  passion,  if  not  perversity,  on  the 
part  of  the  jury. 
•  Judgment  reversed,  and  action  remanded  for  a  new  triaL 

^  A^^^-^viUtr  /<^^i.,<^>ife'  f     2.  Substituted  Contract  ^ 


I^^^mAJ.   r\x<J,       /    McKENZIE  et  al.  v.  HARRISON  et  al 


I  '     (Court  of  Appeals  of  New  York.  1890.     120  N.  Y.  260,  24  N.   E.  458, 

8  L.  R.  A.  257,  17  Am.  St.  Rep.  638.) 

Haight,  J.  This  action  was  brought  to  recover  the  amount  of  rent 
alleged  to  be  due  and  unpaid  upon  a  lease  of  real  estate  in  the  city  of 
New  York.  It  appears  that  the  parties  had  made  and  executed  a  lease 
under  seal  whereby  the  plaintiffs  leased  to  the  defendants  the  store 
and  premises  known  as  "No.  16  Fourth  Street,"  for  the  term  of  10 
years  from  May  1,  1877,  for  the  annual  rental  of  $4,500,  payable 
quarterly.  Upon  the  trial  the  defendants  offered  to  prove,  in  sub- 
stance, that  after  they  had  occupied  the  premises  for  one  year  under 
the  lease,  and  paid  the  rent  in  full  for  that  year,  they  reported  to 
the  plaintiffs  that  their  business  was  very  dull,  and  that  they  could 
not  afford  to  pay  so  much  rent ;  that  thereupon  the  plaintiffs  agreed 
to  reduce  the  rent  $1,000  per  year,  making  $3,500  a  year,  or  $875  for 
each  quarter ;  that  thereafter  the  defendants,  at  the  end  of  each  quar- 
ter, paid  the  plaintiffs  $875,  and  the  plaintiffs  executed  and  delivered 
to  them  a  receipt  for  that  amount,  in  full  for  balance  of  rent  due  at 
that  date  as  per  agreement,  "until  times  are  better;"  that  this  con- 
tinued for  three  years,  after  which  the  plaintiffs  notified  the  defend- 
ants that  thereafter  they  wished  tliem  to  pay  the  amount  of  rent  orig- 
inally provided  for  by  the  lease,  and  that  thereafter  tJie  full  amount 
of  rent  was  paid  until  the  commencement  of  this  action,  in  December, 


366  DISCHARGE   OF  CONTRACT 

1886.     This  evidence  was  excluded  by  the  trial  court,  and  a  verdict 
ordered  for  the  plaintiffs  for  the  full  amount  claimed. 

The  general  term  was  of  the  opinion  that  the  case  of  Coe  v.  Hobby, 
7  Hun,  157;  Id.,  72  N.  Y.  141,  28  Am.  Rep.  120,  disposed  of  the  ques- 
tions involved  in  this  case.  The  facts  in  that  case  are  very  similar  to 
those  which  were  offered  to  be  proved  in  this,  but  in  that  case  the  ac- 
tion was  brought  for  a  quarter's  rent  which  had  become  due,  no  part  of 
which  had  been  paid,  the  lessor  refusing  to  any  longer  accept  the  re- 
duced amount  agreed  upon;  and  he  did  not  seek  or  claim  the  right 
to  recover  the  balance  of  the  quarterly 'rents,  which  had  previously 
been  paid  in  part  under  the  agreement,  and  for  which  a  receipt  had 
been  given  in  full.  The  distinction,  therefore,  between  the  two  cases 
is  apparent.  In  that  case  the  lessor  was  seeking  to  enforce  the  pro- 
visions of  his  lease,  which  was  under  seal,  and  collect  a  quarter's 
rent  then  due  and  owing.  The  lessees  were  defending  under  an  exec- 
utory verbal  contract  to  reduce  the  rent;  while  in  this  case  the  les- 
sees are  defending  under  an  executed  oral  agreement  to  the  effect 
that  the  rent  has  been  paid  and  accepted  in  full,  and  is  evidenced  by 
a  written  receipt  given  therefor. 

We  shall  not  question  the  rule  that  a  contract  or  covenant  under 
seal  cannot  be  modified  by  a  parol  unexecuted  contract.  Coe  v.  Hob- 
by, supra;  Smith  v.  Kerr,  33  Hun,  567-571;  Id.,  108  N.  Y.  31,  15 
N.  E.  70,  2  Am.  St.  Rep.  362.  Neither  shall  we  question  the  views 
of  the  court  below  to  the  effect  that  the  alleged  oral  agreement  in 
this  case  to  reduce  the  rent  $1,000  per  year  was  void  and  inoperative 
in  so  far  as  it  remained  unexecuted.  The  lessors  had  the  right  to 
repudiate  it  at  any  time,  and  demand  the  full  amount  of  rent  provided 
for  by  the  lease;  but,  in  so  far  as  the  oral  agreement  had  become 
executed,  as  to  the  payments  which  had  fallen  due  and  had  been  paid 
and  accepted  in  full  as  per  the  oral  agreement,  we  think  the  rule  in- 
voked has  no  application. 

The  reason  of  the  rule  was  founded  upon  public  policy.  It  was  not 
regarded  as  safe  or  prudent  to  permit  the  contract  of  parties  which 
had  been  carefully  reduced  to  writing,  and  executed  under  seal,  to 
be  modified  or  changed  by  the  testimony  of  witnesses  as  to  the  parol 
statements  or  agreements  of  parties.  Hence  the  rule  that  testimony 
of  parol  agreements  shall  not  be  competent  as  evidence  to  impeach'^ 
vary,  or  modify  written  agreements  or  covenants  under  seal.  But  the 
parties  may  waive  this  rule,  and  carry  out  and  perform  the  agreements 
under  seal,  as  changed  or  modified  by  the  parol  agreement,  thus  ex- 
ecuting both  agreements;  and  where  this  has  been  done,  and  the 
parties  have  settled  with  a  full  knowledge  of  the  facts  and  in  the 
absence  of  fraud,  there  is  no  power  to  revoke  or  remedy  reserved 
to  either  party.  Munroe  v.  Perkins,  9  Pick.  (Mass.)  298,  20  Am. 
Dec.  475;  Lattimore  v.  Harsen,  14  Johns.  330;  McCreery  v.  Day, 
119  N.  Y.  1,  23  N.  E.  198,  6  L.  R.  A.  503,  16  Am.  St.  Rep. '793. 

So,  in  this  case,  if,  as  is  claimed,  the  parol  agreement  was  made  ta 


DISCHARGE   OF   CONTRACT  BY  AGREEMENT  367 

reduce  the  rent  $1,000  per  year,  and  that  agreement  has  been  carried 
out  and  fully  executed  by  the  parties,  and  at  the  end  of  each  quarter, 
when  the  rent  by  the  terms  of  the  lease  became  due  and  payable,  the 
reduced  sum,  as  agreed  upon  by  the  parol  agreement,  was  paid,  and 
the  parties  settled  upon  that  basis,  and,  as  evidence  of  such  settlement, 
the  plaintiffs  gave  a  receipt  in  full  for  the  amount  of  rent  due  to  that 
date,  it  became  executed,  and  the  plaintiffs  cannot  revoke  the  same, 
or  maintain  this  action  to  recover  any  greater  sum  than  that  settled 
for. 

It  is  also  claimed  that  the  oral  agreement  w-as  void  for  the  want  of 
a  consideration.  Assume  this  to  be  so,  and  that  the  plaintiffs  at  any 
time  while  the  agreement  remained  executory  had  the  right  to  demand 
the  full  amount  of  rent  provided  for  by  the  lease.  They,  however, 
had  the  right  to  waive  consideration,  and  carry  out  their  parol  agree- 
ment, and  if  they  did  this  before  executing  it  they  were  brought  with- 
in the  rule  to  which  we  have  already  called  attention.  To  illustrate : 
A,  may  give  B.  his  promissory  note  without  consideration.  As  long 
as  it  remains  in  the  hands  of  B.,  A.  may  interpose  the  defense  that 
it  was  given  for  B.'s  accommodation,  and  was  without  consideration. 
But  as  soon  as  A.  executed  his  promise  to  B.  by  paying  the  note  his 
agreement  becomes  executed,  and  he  cannot  recover  back  the  money 
so  paid. 

It  may  be  claimed  that  the  payment  of  a  less  sum  than  the  admitted 
debt  is  not  a  good  accord  and  satisfaction.  There  are  numerous  au- 
thorities sustaining  this  doctrine.  Lord  Coke  stated  the  rule  to  be 
that,  where  the  condition  is  for  the  payment  of  a  definite,  fixed,  liqui- 
dated sum,  the  obligor  cannot  at  the  time  appointed  pay  a  less  sum  in 
satisfaction  of  the  whole,  because  it  is  apparent  that  the  lesser  sum  of 
money  cannot  be  a  satisfaction  of  a  greater.  This  rule  has  been  crit- 
icised as  unsound  and  unjust  in  cases  where  the  lesser  sum  is  accepted 
in  full  satisfaction  of  the  greater,  (see  Co.  Litt.  212b;  Foakes  v.  Beer, 
9  L.  R.  App.  Cas.  605-617;  Jaffray  v.  Davis,  48  Hun,  500.  1  N.  Y. 
Supp.  814;)  while,  in  other  cases,  the  courts  have  gone  still  further, 
and  held  that  the  rule  applied  even  in  cases  where  the  payment  was 
accepted  in  full  satisfaction,  and  a  receipt  given  therefor.  Harriman 
v.  Harriman,  12  Gray  (Mass.)  341 ;  Smith  v.  Phillips,  11  Va.  548 ; 
Bunge  v.  Koop,  48  N.  Y.  225,  8  Am.  Rep.  546;  Wilkinson  v.  Byers, 
Langd.  Cas.  Cont.  197-201. 

Under  the  view  taken  by  us  of  this  case,  it  does  not  become  neces- 
sary to  approve  or  disapprove  of  the  doctrine  promulgated  in  these 
cases,  for  this  rule  has  no  application  when  the  payment  is  made  un- 
der an  agreement  which  is  recognized  as  valid  by  the  parties,  and  has 
been  fully  executed.  Again,  a  debt  could  be  discharged  at  common 
law  by  executing  a  formal  release  under  seal.  The  seal  imported  a 
consideration,  and  this  has  not  been  questioned  by  any  of  the  cases. 
There  undoubtedly  is  a  distinction  between  releases  under  seal  and 
an  ordinary  receipt  given  on  the  payment  of  a  sum  of  money  which 


368  DISCHARGE   OP  CONTRACT 

is  not  under  seal,  the  latter  being  subject  to  explanation  and  proof 
showing  that  it  was  given  without  consideration.  But,  even  though 
there  may  not  be  an  accord  and  satisfaction,  there  may  be  a  gift,  and 
the  receipt  may  be  evidence  of  such  gift. 

A  gift  is  a  voluntary  transfer  of  any  property  or  thing  by  one  to 
another  without  consideration.  To  be  valid,  it  must  be  executed. 
There  must  be  a  delivery  by  the  donor  such  as  will  place  the  property 
or  thing  given  under  the  control  of  the  donee,  and  there  must  be  an 
intent  to  vest  the  title  in  him.  Actual^  and  personal  delivery  by  the 
donor  is  not  always  necessary,  for,  when  another  person  is  the  cus- 
todian, an  order  of  the  donor  to  deliver  to  the  donee  may  constitute 
a  gift.  It  may  be  oral  or  in  writing.  No  formal  words  or  expressions 
are  required.  It  is  a  question  of  intent,  and  the  inquiry  is  as  to  what 
was  intended!  by  that  which  was  said  and  done.  A  promissory  note 
or  other  evidence  of  debt  may  be  the  subject  of  a  gift,  and  the  de- 
livery of  the  note  or  of  the  evidence  of  debt  is  evidence  tending  to 
show  an  intent  to  give.  A  debt  may  be  forgiven,  and  a  receipt  in  full 
may  be  evidence  of  such  forgiveness.  2  Schouler,  Pers.  Prop.  ■§§ 
68-90.    See,  also,  Bish.  Cont.  §  50. 

In  the  case  of  Gray  v.  Barton,  55  N.  Y.  68,  14  Am.  Rep.  181,  the 
defendant  was  owing  the  plaintiff  the  sum  of  $820.  The  plaintiff  told 
him  that  if  he  would  give  him  one  dollar  to  make  it  lawful  he  would 
give  him  the  entire  debt.  Whereupon  the  defendant  delivered  one 
dollar  to  the  plaintiff,  who  thereupon  executed  and  delivered  a  receipt 
therefor  in  full  to  balance  all  accounts  to  date,  of  whatever  name  and 
nature.  It  was  held  that  the  executing  and  delivery  of  the  receipt  in 
full,  with  the  purpose  of  giving  the  debt,  was  such  an  act  that  the  law 
would  construe  the  instrument,  if  necessary,  as  an  assignment  to  the 
defendant.  This  case  is  in  point,  and  is  controlling  upon  the  question 
under  consideration.  See  Ferry  v.  Stephens,  66  N.  Y.  321 ;  Carpen- 
ter V.  Soule,  88  N.  Y.  251-256,  42  Am.  Rep.  248. 

We  are  therefore  of  the  opinion  that  the  proof  offered  should  have 
been  received,  that  from  it  the  jury  might  have  found  that  the  plain- 
tiffs gave  to  the  defendant  the  balance  of  the  rent  for  which  this  ac- 
tion was  brought.  The  judgment  should  be  reversed,  and  a  new  trial 
ordered,  with  costs  to  abide  the  event.  All  concur,  except  FoixETT. 
C.  J.,  and  Bradley  and  Parker,  J  J.,  who  dissent. 


DISCHABGE   OF  CONTEACT   BY   AGBEEMENT  369^ 


3.  Occurrence  of  Condition  Subsequent. 


RAY  V.  THOMPSON. 

(Supreme   Judicial    Court   of   Massachusetts^  1S53.     12   Cush.   2S1, 
59  Am.   Dec.  1S7.) 

Assumpsit  for  the  price  of  a  horse  sold  to  the  defendant.  The  de- 
fence was  that  the  horse  was  sold  under  a  conditional  contract,  with 
a  right  to  return  him  within  a  specified  time,  if  not  satisfactory  to  the 
defendant,  and  that  the  defendant  did  so  return  him.  At  the  trial  in 
the  court  of  common  pleas  before  Mellen,  J.,  the  plaintiff  offered  ev- 
idence tending  to  prove  that  during  the  time  limited  by  the  contract 
for  the  return  of  the  horse,  and  while  he  was  in  the  defendant's  pos- 
session, the  defendant  misused  and  abused  the  horse,  whereby  he  was 
materially  injured  and  lessened  in  value,  and  that  the  plaintiff  did  not 
accept  him  in  return;  which  evidence,  the  presiding  judge,  on  objec- 
tion by  the  defendant,  rejected,  and,  the  verdict  being  for  the  defend- 
ant, the  plaintiff  alleged  exceptions  to  the  ruling. 

Per  Curiam.  The  evidence  offered  by  the  plaintiff  ought  to  have 
been  admitted,  to  prove,  if  he  could,  that  the  horse  had  been  abused 
and  injured  by  the  defendant,  and  so  to  show  that  the  defendant  bad 
put  it  out  of  his  power  to  comply  with  the  condition,  by  returning  the 
horse.  The  sale  was  on  a  condition  subsequent ;_  that  is,  on  condition 
he  did  not  elect  to  keep  the  horse,  to  return  him  within  the  time  lim- 
ited. Being  on  a  condition  subsequent,  the  property  vested  presently 
in  the  vendee,  defeasible  only  on  the  performance  of  the  condition. 
If  the  defendant,  in  the  meantime,  disabled  himself  from  performing 
the  condition, — and  if  the  horse  was  substantially  injured  by  the  de- 
fendant by  such  abuse,  he  would  be  so  disabled, — then  the  sale  became 
absolute,  the  obligation  to  pay  the  price  became  unconditional,  and  the 
plaintiff  might  declare  as  upon  an  indebitatus  assumpsit,  without  set- 
ting out  the  conditional  contract.  Moss  v.  Sweet,  3  Eng.  Law  &  Eq. 
311,  16  Adol.  &  E.  493. 

New  trial  ordered. 
Thbockm.Cont. — 24 


370t^  DISCHARGE  OF  CONTRACT 

II.  Discharge  of  Contract  by  Performance  * 
1.  In  Generai, 


PENNINGTON  v.  ROWLAND. 

(Supreme  Court  of  Rhode   Island,   1S9S.     21   R.  I.  65,  41  Atl.  891, 
79  Am.  St.  Rep.  774.) 

Action  by  Harper  Pennington  against  Samuel  S.  Rowland.  There 
was  a  verdict  for  plaintiff. 

Stiness,  J.  The  plaintiff  was  employed  to  paint  a  pastel  portrait 
of  the  defendant's  wife  for  the  sum  of  $500,  under  a  contract  by  cor- 
respondence, which  only  provided  for  the  price.  The  plaintiff*  went 
to  the  defendant's  house,  in  Washington,  D.  C.,  and  began  his  work. 
The  defendant  testified  that  he  at  once  objected  to  the  proposed  por- 
trait, in  street  dress  and  hat;  but  the  plaintiff'  said  it  was  an  artistic 
idea,  which  he  wished  to  carry  out,  and  that,  if  it  was  not  satisfactory, 
he  would  paint  the  defendant  one  "until  satisfied."  He  also  testified 
that  the  plaintiff  undertook  the  commission  with  the  understanding 
that  he  would  paint  a  satisfactory  portrait.  The  plaintiff  denies  this, 
and  says  that,  upon  the  completion  of  his  work,  Mrs.  Rowland  said 
that  she  wanted  another  portrait,  taken  in  a  different  style  of  dress,  to 
show  a  pearl  necklace  which  had  belonged  to  her  mother.  Re  then 
painted  a  second  portrait,  and  went  away,  leaving  his  implements,  as 
he  says,  to  be  sent  to  him,  or,  as  the  defendant  says,  because  the  por- 
trait was  not  finished,  and  because  he  was  to  return  to  complete  it. 
The  defendant  says  that  he  received  a  letter  from  the  plaintiff  stating 
that  the  pictures  should  be  framed  to  keep  the  pastel  from  brushing 
off',  and  that  he  would  give  instructions  to  a  man,  whom  he  usually 
employed,  to  do  it.  The  frames  came,  the  pictures  were  put  into  them, 
and,  after  some  correspondence,  the  defendant  paid  for  them,  and  the 
pictures  are  still  in  his  possession. 

Upon  this  general  statement  of  testimony,  the  plaintiff's  claim  was 
that  he  painted  one  portrait  at  an  agreed  price,  and  then  another  upon 
request,  for  which  he  had  charged  the  same  price,  and  that  both  were 
not  only  without  conditions,  but  were  said  to  be  satisfactory.  The 
defendant  claims  that  the  plaintiff  agreed  upon  starting  his  work  that, 
if  the  picture  was  not  satisfactory,  he  would  paint  another;  that,  after 
expressing  his  dissatisfaction,  the  plaintiff  immediately  started  another, 
which  he  did  not  finish ;  that  the  pictures  were  framed  simply  to  pre- 
serve them  until  the  last  one  should  be  finished;  and  that  they  have 
since  remained  with  him  in  that  way.     These  conflicting  claims  pre- 

2  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  233-2.S5. 


DISCHARGE   OF   CONTRACT   BY   PERFORMANCE  371 

sent  obvious  questions  of  fact  for  a  jury.  Numerous  exceptions  were 
taken  at  the  trial,  which  can  be  better  considered  generally  than  in 
detail. 

According  to  the  defendant's  statement  that  the  work  was  to  be  sat- 
isfactory to  him,  he  asked  the  court  to  instruct  the  jury  that  he  had 
the  right  to  reject  the  first  portrait,  if  he  was  not  satisfied  with  it. 
The  judge  instructed  the  jury  that  "satisfactory"  means  "reasonably 
satisfactory,"  but,  in  response  to  another  request,  he  also  instructed 
the  jury  that  "an  artist,  if  he  agreed  to  paint  a  picture  to  one's  sat- 
isfaction, has  no  cause  of  action  for  the  price  unless  the  buyer  is  sat- 
isfied, however  good  the  picture  is";  adding:  "But,  unless  the  man 
returns  the  picture,  he  is  conclusively  held  to  be  satisfied."  This  last 
instruction,  without  the  added  sentence,  states  the  law  correctly,,  ac- 
cording to  the  current  of  authority ;  and,  in  giving  the  preceding  in- 
struction that  a  portrait  must  be  "reasonably  satisfactory,"  the  judge 
doubtless  had  in  mind  another  class  of  cases  to  which  that  limitation 
may  apply.  When  the  subject  of  the  contract  is  one  which  involves 
personal  taste  or  feeling,  an  agreement  that  it  shall  be  satisfactory 
to  the  buyer  necessarily  makes  him  the  sole  judge  whether  it  answers 
that  condition.  He  cannot  be  required  to  take  it  because  other  people 
might  be  satisfied  with  it,  for  that  is  not  what  he  agreed  to  do.  Per- 
sonal tastes  differ  widely,  and,  if  one  has  agreed  to  submit  his  work 
to  such  a  test,  he  must  abide  by  the  result.  A  large  number  of  wit- 
nesses might  be  brought  to  testify  that  the  work  was  satisfactory  to 
them,  that  they  considered  it  perfect,  and  that  they  could  see  no  rea- 
sonable ground  for  objecting  to  it.  But  that  would  not  be  the  test  of 
the  contract,  nor  should  a  jury  be  allowed  to  say  in  such  a  case  that  a 
defendant  must  pay  because,  by  the  preponderance  of  evidence,  he 
ought  to  have  been  satisfied  with  the  work,  or,  in  other  words,  that  it 
was  "reasonably  satisfactory." 

Upon  this  principle  numerous  cases  have  been  decided.  In  Mc- 
Carren  v.  McNulty,  7  Gray  (Mass.)  139  (an  action  to  recover  the 
price  of  a  bookcase),  the  court  said :  "It  may  be  that  the  plaintiff  was 
injudicious  or  indiscreet  in  undertaking  to  labor  and  furnish  material 
for  a  compensation  the  payment  of  which  was  made  dependent  upon 
a  contingency  so  hazardous  or  doubtful  as  the  approval  or  satisfac- 
tion of  a  party  particularly  in  interest.  But  of  that  he  was  the  sole 
judge.  Against  the  consequences  resulting  from  his  own  bargain,  the 
law  can  afford  him  no  relief.  Having  voluntarily  assumed  the  obliga- 
tions and  risk  of  the  contract,  his  legal  rigiits  are  to  be  ascertained  and 
determined  solely  according  to  its  provisions."  Gibson  v.  Cranage. 
39  Mich.  49,  33  Am.  Rep.  351,  was  to  the  same  effect,  where  the 
subject  of  the  action  was  a  portrait.  In  Zaleski  v,  Clark.  44  Conn. 
218,  26  Am.  Rep.  446.  the  plaintiff'  was  to  make  a  bust  of  the  defend- 
ant's deceased  husband  satisfactory  to  her.  The  court  held  that  it  was 
for  her  alone  to  determine  whether  it  was  so,  and  that  it  was  not 
enough  to  show  that  her  dissatisfaction  was  unreasonable.     Brown  v. 


372  DISCHARGE  OF  CONTRACT 

Foster,  113  Mass.  136,  18  Am.  Rep.  463,  was  for  a  suit  of  clothes. 
Devens,  J.,  said :  "It  is  not  for  any  one  else  to  decide  whether  a  re- 
fusal to  accept  is  or  is  not  reasonable,  when  the  contract  permits  the 
defendant  to  decide  himself  whether  the  articles  furnished  are  to  his 
satisfaction."  The  doctrine  was  carried  to  very  great  length  in  Singer- 
ly  V.  Thayer,  108  Pa.  291,  2  Atl.  230,  56  Am.  Rep.  207,  where  an  ele- 
vator had  been  erected  in  a  building,  and  "warranted  satisfactory  in 
every  respect."  It  was  held  that,  if  it  had  been  substantially  com- 
pleted so  that  the  owner  of  the  building  could  understand  how  it 
would  operate,  it  could  be  rejected  if  it  was  not  satisfactory. 

In  Boiler  Co.  v.  Garden,  101  N.  Y.  387,  4  N.  E.  749,  54  Am.  Rep. 
709,  the  opinion  sets  out  the  two  classes  of  cases  with  reference  to 
which  a  distinction  has  been  made.  One  class  is  that  which  involves 
personal  taste  and  judgment,  examples  of  which  we  have  shown ;  and 
the  other  class  is  that  where  the  subject-matter  of  the  contract  is  such 
that  the  satisfaction  stipulated  for  must  be  held  to  apply  to  quality, 
workmanship,  salability,  and  other  like  considerations,  rather  than  to 
personal  satisfaction.  For  example,  if  one  agrees  to  sell  land  with  a 
a  satisfactory  title,  and  shows  a  title  valid  and  complete,  the  parties 
must  have  intended  such  a  title  to  be  satisfactory,  rather  than  to  leave 
an  absolute  right  in  the  purchaser  to  say  "I  am  not  satisfied,"  when  no 
reason  could  be  shown  why  he  should  not  be  satisfied.  So,  if  one 
agrees  to  do  work  in  a  satisfactory  manner,  it  must  mean  a  workman- 
like manner,— as  well  as  it  would  be  expected  to  be  done,— rather  than 
a  merely  personal  or  whimsical  rejection.  It  is  this  class  Of  cases  to 
which  the  term  "reasonably  satisfactory"  applies.  Hence  in  the  boiler 
case,  last  cited,  it  was  held  that  a  simple  allegation  of  dissatisfaction, 
without  some  good  reason  assigned  for  it,  might  be  a  mere  pretext, 
and  would  not  be  regarded. 

In  Machine  Co.  v.  Smith,  50  Mich.  565,  15  N.  W.  906,  45  Am.  Rep. 
57,  the  court  says:  "In  the  one  class  the  right  of  decision  is  complete- 
ly reserved  to  the  promisor,  without  being  liable  to  disclose  reasons 
or  account  for  his  course ;  and  a  right  to  inquire  into  the  grounds  of 
his  action  and  overhaul  his  determination  is  absolutely  excluded  from 
the  promisee  and  from  all  other  tribunals.  In  the  other  class  the 
promisor  is  supposed  to  undertake  that  he  will  act  reasonably  and 
fairly,  and  found  his  determination  upon  grounds  which  are  just  and 
sensible ;  and  from  thence  springs  a  necessary  implication  that  his  de- 
cision, in  point  of  correctness  and  the  adequacy  of  the  grounds  of  it, 
is  open  to  consideration,  and  subject  to  the  judgment  of  judicial  tri- 
ors." See,  also,  McClure  v.  Briggs,  58  Vt.  82,  2  Atl.  583,  56  Am.  Rep. 
557 ;  Daggett  v.  Johnson,  49  Vt.  345 ;  Manufacturing  Co.  v.  Brush, 
43  Vt.  528 ;  1  Beach,  Mod.  Cont.  §  104.  Even  in  cases  of  the  latter 
class,  where  a  rejection  is  made  in  good  faith,  the  dissatisfaction  of 
the  purchaser  is  held  in  many  decisions  to  be  sufficient.  See  note  to 
Boiler  Co.  v.  Garden,  54  Am.  Rep.  711  (s.  c,  101  N.  Y.  387,  4  N.  E. 
749). 


DISCHARGE    OF    CONTRACT   BY    PERFORilANOB  373 

The  instruction  to  the  jury  in  the  present  case  that  "satisfactory" 
means  "reasonably  satisfactory"  was  erroneous  as  appHed  to  the  sub- 
ject-matter of  the  alleged  contract.  Evidently,  the  trial  judge  thought 
that  the  definition  of  the  term  was  of  little  weight,  because  the  de- 
fendant had  not  returned  the  pictures,  or  either  of  them,  and  hence 
he  added  the  words :  "But,  unless  the  man  returns  the  pictures,  he  is 
conclusively  held  to  be  satisfied."  The  same  instruction  appears  so 
clearly  in  other  parts  of  the  charge  that  the  jury  must  have  understood 
that  the  retention  of  the  pictures  made  the  defendant  liable  for  the 
price  of  both.  Taken  generally,  the  instruction  would  be  quite  correct 
upon  the  ground  that  one  cannot  retain  the  property  of  another  and 
still  refuse  to  pay  for  it.  But  the  instruction  as  given  ignores  the  de- 
fense set  up  in  this  case,  which  is  that  the  first  picture  was  not  ac- 
cepted, and  the  second  not  completed. 

The  demand  relied  on  by  the  plaintiff  is  contained  in  his  letter  of 
January  7,  1896,  in  which  he  asks  the  defendant  to  send  him  both 
pictures  for  exhibition.  To  this  the  defendant  replied  that  he  wanted 
one-,  and  objected  to  the  other  being  shown  as  a  likeness  of  his  wife. 
He  also  testified  that  he  had  not  objected  to  the  removal  of  this  one, 
but  only  to  its  exhibition.  Now,  whether,  under  the  circumstances  of 
this  case,  there  was  a  refusal  to  return  the  pictures,  or  an  excuse  for 
the  retention  of  one  and  a  retention  of  the  other  because  it  was  not 
completed,  were  questions  of  fact  for  the  jury.  The  question  whether 
the  contract  was  as  claimed  by  the  defendant  also  raised  a  question 
of  fact.  If  the  jury  had  found  that  the  contract  was  for  a  satisfactory 
portrait,  that  the  second  was  satisfactory,  but  not  completed,  and  that 
the  other  was  not  returned  because  of  the  suggestion  of  its  exhibition, 
they  might  have  found  for  the  defendant.  The  facts  that  the  pictures 
were  on  the  walls  of  the  defendant's  home,  and  that  he  had  paid  for 
the  frames,  are  such  as  would  naturally  be  considered  in  determining 
an  acceptance;  but  they  do  not  conclude  such  determination,  nor  re- 
move the  questions  from  the  jury. 

The  instruction,  therefore,  that  by  the  mere  retention  of  the  pictures, 
under  the  circumstances  of  the  case,  the  defendant  was  conclusively 
held  to  be  satisfied  with  and  liable  for  both,  was  erroneous.  New  trial 
granted. 


374^  DISCHARGE  OF  CONTRACT 


2.  Payment 


CHELTENHAM  STONE  &  GRAVEL  CO.  v.  GATES  IRON 

WORKS. 

(Supreme  Court  of  lUiuois,    ISSS.     124  111.   62.3,   16  N.    E.   923.) 

Sheldon,  C.  J.  This  is  an  appeal  from  a  judgment  of  the  appel- 
late court  for  the  First  district,  affirming  a  judgment  of  the  superior 
court  of  Cook  county.  The  case  made  by  the  evidence  was  this :  Be- 
tween March  19  and  October  15,  1885,  appellee,  the  Gates  Iron 
Works,  sold  appellant,  the  Cheltenham  Stone  &  Gravel  Company,  ma- 
chinery and  merchandise  to  the  amount  of  $3,940.97.  Accounts  were 
rendered  monthly,  and  payments  were  made  on  account  from  time  to 
time.  During  August,  1885,  appellee  received  from  appellant  iron  to 
the  amount  of  $2,600,  and  a  note  dated  August  10,  1885,  for  $1,000. 
due  90  days  from  said  date,  signed  by  the  Cheltenham  Improvement 
Company,  payable  to  appellee.  Both  these  items,  the  iron  and  the 
note,  were  credited  appellant  on  appellee's  books,  and  the  statement  of 
account  rendered  appellant  on  September  1st  showed  a  credit  of  the 
two  amounts,  and  the  statement  of  account  thereafter  rendered  started 
off  with  the  balance  after  deducting  these  amounts. 

When  the  transactions  for  the  season  were  closed,  appellee's  books 
showed  an  indebtedness  against  appellant  of  $145.97.  This  amount  is 
conceded  to  be  still  due.  Prior  to  the  maturity  of  its  note,  the  im- 
provement company  had  become  insolvent,  and  the  note  was  not  paid. 
Appellee  sued  the  improvement  company  on  the  note,  and  obtained 
judgment,  but  was  unable  to  collect  it.  Then  it  brought  this  suit 
against  appellant  on  the  account,  ignoring  the  credit  it  had  given  for 
the  amount  of  the  note,  and  on  the  trial  tendered  appellant  an  assign- 
ment of  its  judgment  against  the  improvement  company.  Appellee 
recovered  a  verdict  and  judgment  for  $1,145.97,  the  full  amount  of  its 
claim. 

It  is  insisted  that  the  presumption  of  law  from  these  facts  was 
that  the  note  was  taken  in  absolute  payment;  and,  as  there  was  no 
evidence  offered  tending  to  rebut  that  presumption,  appellee  was,  on 
the  case  made  by  it,  only  entitled  to  a  verdict  for  $145.97;  and  that 
the  court  erred  in  not  granting  appellant's  motion,  made  when  the  ap- 
pellee rested  its  case,  to  direct  the  jury  to  find  a  verdict  for  appellee 
for  $145.97,  and  also  in  not  giving  the  following  instruction  asked  by 
appellant,  but  refused,  viz. :  "If  the  jury  believe,  from  the  evidence, 
that  the  note  referred  to  was  credited  by  the  plaintiff  to  the  defendant 
on  the  books  of  the  plaintiff,  and  included  as  a  credit  in  statement  of 
account  afterwards  rendered  by  the  plaintiff  to  defendant,  then  the 


DISCHAEGE   OF  CONTRACT  BY   PERFOEMANCE  375 

presumption  of  law  is  that  said  note  was  received  in  payment,  and 
the  burden  of  proof  is  upon  the  plaintiff  to  show  that  such  was  not 
the  intention  of  the  parties  at  the  time  said  note  was  given;  and  if 
the  plaintiff  has  failed  to  show  such  intention,  that  the  same  should 
not  be  received  as  payment,  by  a  fair  preponderance  of  testimony,  the 
jury  will  find  for  the  defendant  on  that  issue." 

Story,  in  his  work  on  Promissory  Notes  (section  104),  lays  dov^m 
the  rule  in  this  respect  as  follows :  "In  general,  by  our  law,  unless 
otherwise  specially  agreed,  the  taking  of  a  promissory  note  for  a  pre- 
existing debt  or  a  contemporaneous  consideration  is  treated  prima 
facie  as  a  conditional  payment  only ;  that  is,  as  payment  only,  if  it  is 
duly  paid  at  maturity.  But  in  some  of  the  American  states  a  dift'er- 
ent  rule  is  applied,  and,  unless  it  is  otherwise  agreed,  the  taking  of 
a  promissory  note  is  deemed  prima  facie  an  absolute  payment  of  the 
pre-existing  debt  or  other  consideration.  But,  in  each  case,  the  rule  is 
founded  upon  a  mere  presumption  of  the  supposed  intention  of  the 
parties,  and  is  open  to  explanation  and  rebutter,  by  establishing,  by 
proper  proofs,  what  the  real  intention  of  the  parties  was;  and  this 
may  be  established,  not  only  by  express  words,  but  by  reasonable  im- 
plication from  the  attendant  circumstances." 

In  Tobey  v.  Barber,  5  Johns.  (N.  Y.)  68,  4  Am.  Dec.  326,  a  note  ot 
a  third  person  was  given  for  rent  due,  and  a  receipt  given  for  the 
rent.  The  note  was  not  paid,  the  maker  having  become  insolvent  be- 
fore the  note  became  due.  The  court  say:  "The  taking  of  the  note 
was  no  extinguishment  of  the  debt  due  for  the  rent.  It  is  a  rule,  well 
settled  and  repeatedly  recognized  in  this  court,  that  taking  a  note, 
either  of  the  debtor  or  of  a  third  person,  for  a  pre-existing  debt,  is  no 
payment  unless  it  be  expressly  agreed  to  take  the  note  as  payment, 
and  to  run  the  risk  of  its  being  paid,  or  unless  the  creditor  parts 
with  the  note,  or  is  guilty  of  laches  in  not  presenting  it  for  payment 
in  due  time ;  and  it  was  held  that  the  inference  arising  from  the  re- 
ceipt was  not  enough  to  establish  such  a  positive  agreement." 

Johnson  v.  Weed,  9  Johns.  (N.  Y.)  310,  6  Am.  Dec.  279,  is  to  the 
same  effect, — a  case  where  the  note  of  a  third  person  had  been  given 
in  payment  of  a  debt,  and  a  receipt  in  full  given.  Mclntyre  v.  Kenne- 
dy, 29  Pa.  448;  Hunter  v.  Moul,  98  Pa.  13,  42  Am.  Rep.  610;  Brown 
V.  Olmsted,  50  Cal.  162, — are  authorities  in  support  of  the  rule  that 
taking  the  note  of  a  third  person  for  a  preexisting  debt  is  no  payment 
unless  it  be  expressly  agreed  to  take  the  note  as  payment.  The  deci- 
sions in  this  state  are  essentially  to  the  same  effect.  Walsh  v.  Lennon, 
98  111.  27,  38  Am.  Rep.  75;   Wilhclm  v.  Schmidt,  84  111.  185. 

It  is  insisted  that,  although  the  acceptance  of  the  note  merely  nii-lit 
not  be  payment,  yet,  treating  the  note  as  payment,  as  was  done  here, 
by  crediting  it  as  payment  on  appellee's  books,  and  in  statements  of 
account  rendered,  shows  that  the  note  was  taken  in  payment..  \Vc  do 
not  consider  this  any  stronger  evidence,  in  that  regard,  than  were  the 
rece'pts  in  full  which  were  given  in  the  cases  cited  from  Johnson.     In 


376^  DISCHARGE   OF   CONTRACT 

regard  to  the  receipt  in  Johnson  v.  Weed,  the  court  remarked:  "It 
might  still  have  been  understood,  consistently  with  the  words  of  it, 
[receipt,]  that  the  note  was  received  in  full,  under  the  usual  condition 
of  its  being  a  good  note."  And  so  in  Brigham  v.  Lally,  130  Mass.  485, 
a  case  where  such  a  note  of  a  third  person  had  been  taken  on  an  open 
account,  and  the  debtor  credited  therewith,  it  was  held  that  the  trial 
court  properly  refused  to  rule  that  placing  the  note  to  the  credit  of  the 
defendant  upon  the  plaintiff's  journal  and  ledger,  and  making  no  other 
appropriation  of  the  money,  was  in  law  a^payment.  We  think  the  rul- 
ing of  the  court  here  complained  of  is  entirely  well  sustained  by  au- 
thority. 

Counsel  for  appellee,  in  his  address  to  the  jury,  was  allowed  by 
the  court,  against  appellant's  objection,  to  argue  that  a  scheme  had 
existed  whereby  one  of  the  defendant's  officers  had  foisted  the  note 
upon  the  plaintiff,  knowing  the  maker  to  be  or  about  to  become  insol- 
vent, so  that  the  loss  might  fall  upon  the  plaintiff ;  and  an  instruction 
asked  by  the  defendant  that  there  was  no  evidence  in  such  regard,  and 
that  the  jury  should  disregard  the  remarks  of  counsel  with  reference 
thereto,  was  refused ;  and  this  action  of  the  court  is  assigned  for  error. 
While  these  remarks  of  counsel  may  have  been  improper,  and  the 
court  might  well  have  interposed  as  requested,  we  cannot  say  that  the 
refusal  to  do  so  was  such  error  as  should  cause  a  reversal  of  the  judg- 
ment. 

The  judgment  of  the  appellate  court  must  be  affirmed. 


3.  Tender. 


MOORE  V.  NORMAN. 

(Supreme  Court  of  Minnesofa,  1892.     52  Minn.  S3,  53  N.  W.  809,  18  L.  R.  A. 
359,  38  Am.  St.  Rep.  526.) 

Action  by  Ella  M.  Moore  against  H.  G.  Norman  to  recover  pos- 
session of  personal  property.  Verdict  for  defendant.  From  an  or- 
der refusing  a  new  trial,  plaintiff  appeals. 

Dickinson,  J.'  The  defendant,  to  secure  two  promissory  notes 
executed  by  him  to  the  plaintiff,  mortgaged  certain  personal  property 
to  her.  She  prosecutes  this  action  to  recover  possession  of  a  part  of 
the  mortgaged  property  by  virtue  of  her  rights  as  such  mortgagee. 
A  former  appeal  in  this  action  is  reported  in  43  Minn.  428,  45  N.  W. 
857,  9  L.  R.  A.  55,  19  Am.  St.  Rep.  247. 

The  only  issue  to  which  reference  is  now  necessary  is  as  to  A'heth- 

•  A  portion  of  the  opinion  is  omitted. 


DISCHARGE    OF   COXTEACT   BY    PERFOKMANCE  377 

er  certain  payments  and  a  tender  of  payment  made  by  the  defendant 
were  sufficient  and  effectual  to  discharge  the  mortgages.  The  whole 
transaction  on  the  part  of  the  plaintiff  was  conducted  by  one  George 
R.  Moore,  who  was  her  general  agent.  Long  after  the  maturity  of 
the  notes  the  defendant  made  a  tender  of  payment  to  the  plaintiff, 
which  on  his  part  is  claimed  to  have  been  sufficient  in  amount,  with 
payments  which  had  been  previously  made,  to  complete  the  payment 
of  the  debt,  and  hence  to  discharge  the  mortgages.  .Moore  v.  Nor- 
man, 43  Minn.  428,  45  N.  W.  857,  9  L.  R.  A.  55,  19  Am.  St.  Rep. 
247. 

The  plaintiff,  however,  then  claimed  that  the  amount  tendered  was 
not  sufficient  to  pay  the  debt;  and  whether  it  was  so  or  not  was  one 
of  the  issues  in  this  case,  in  respect  to  which  the  plaintift''s  contention, 
that  the  amount  was  insufficient,  was  supported  by  evidence  which 
would  have  sustained  a  verdict  in  her  favor.  The  evidence  tended 
to  show  that  the  tender  was  accompanied  by  a  demand  that  the  notes 
be  surrendered;  that  such  surrender  was  refused,  a  larger  sum  be- 
ing claimed  to  be  due;  but  that  the  plaintiff  (by  her  agent,  who  held 
the  notes)  offered  to  receive  the  money  tendered,  and  indorse  it  on 
the  notes,  which  offer  the  defendant  refused  to  accept.  The  court,  at 
the  request  of  the  defendant,  charged  the  jury  to  the  effect  that  if  the 
amount  tendered  was  sufficient  the  defendant  had  a  right  to  demand 
the  surrender  of  his  notes.  This  constitutes  one  of  the  errors  as- 
signed. 

We  think,  as  applied  to  the  circumstances  of  this  case,  this  instruc- 
tion was  erroneous.  It  may  be  stated  as  a  general  proposition,  appli- 
cable at  least  where  it  appears  that  a  larger  sum  than  that  tendered  is 
in  good  faith  claimed  to  be  due,  that  the  tender  is  not  effectual  as 
such  if  it  be  coupled  with  such  conditions  that  the  acceptance  of  it, 
as  tendered,  will  involve  an  admission  by  the  party  accepting  it  that 
no  more  is  due.  Leake,  Cont.  865,  866;  Add.  Cont.  (9th  Ed.)  153; 
2  Chit.  Cont.  1194;  Bowen  v.  Owen,  11  Q.  B.  130;  Finch  v.  Miller, 
5  C.  B.  428;  Evans  v.  Judkins,  4  Camp.  156;  Foord  v.  Noll,  2  Dowl. 
(N.  S.)  617;  Thayer  v.  Brackett,  12  Mass.  450;  Wood  v.  Hitch- 
cock, 20  Wend.  (N.  Y.)  47;  Noyes  v.  Wyckoff,  114  N.  Y.  204,  21 
N.  E.  158;  Holton  v.  Brown,  18  Vt.  224,  46  Am.  Dec.  148.  See, 
further,  in  support  of  the  general  rule  that  a  tender,  to  be  effectual, 
must  be  absolute  and  unconditional,  Moore  v.  Norman,  43  Minn.  428, 
434,  45  N.  W.  857,  9  L.  R.  A.  55,  19  Am.  St.  Rep.  247;  Bank  v. 
Hove,  45  Minn.  40,  42,'  47  N.  W.  449;  Balme  v.  Wambaugh.  16 
Minn.  116  (Gil.  106). 

The  most  common  and  familiar  illustrations  of  the  proposition 
above  stated  are  cases  where  the  tender  is  made  as  being  all  that  is 
due,  or  as  payment  in  full.  It  is  everywhere  held  that  such  a  tender 
is  not  good.  The  debtor  has  no  right  to  the  benefit  of  a  tendtr,  as 
having  the  effect  of  a  payment,  when  it  is  burdened  with  such  a  con- 
dition that  the  creditor  cannot  accept  the  money  without  compromis- 


378  DISCHARGE  OP  CONTRACT 

ing  his  legal  right  to  recover  the  further  sum  which  he  claims  to  be 
due.  This  case  falls  within  the  same  principle.  By  offering  to  pay 
the  money  only  upon  the  condition  that  the  plaintiff  deliver  up  the 
notes,  (if  such  was  the  fact,)  the  defendant  insisted  upon  a  condi- 
tion the  acceptance  of  which  would  at  least  seriously  compromise  the 
right  of  the  plaintiff  to  recover  any  more,  even  though  it  should  be 
true  that  the  amount  unpaid  exceeded  the  sum  tendered.  The  ac- 
ceptance of  the  money  and  the  surrender  of  the  notes  would  be  at 
least  strong  evidence  against  her,  in  the  nature  of  an  admission,  that 
the  notes  were  thereby  fully  paid. 

The  defendant  should  not  be  heard  to  assert  that  a  mere  offer  to  pay 
a  specified  sum,  less  than  was  supposed  by  the  other  party  to  be  due, 
has  the  effect  of  a  payment,  so  as  to  discharge  the  mortgage,  when 
the  offer  was  burdened  with  such  a  condition.  It  was  enough  for  his 
protection  that  the  plaintiff  would  have  received  the  money  offered 
and  have  indorsed  its  payment  on  the  notes,  which  were  already  over- 
due and  still  in  the  hands  of  the  plaintiff.  If  the  defendant  rejected 
this  oft'er,  and  insisted  upon  the  surrender  of  the  notes,  the  natural 
and  only  reasonable  construction  to  be  put  upon  his  conduct  was  that 
he  insisted  that  the  tender,  if  accepted,  should  be  accepted  as  payment 
of  the  notes  in  full.  If  that  was  the  effect  of  the  tender,  it  was  bad, 
under  all  the  authorities.  A  mere  tender  should  not  be  effectual  to 
discharge  the  lien  of  a  mortgage  unless  it  be  certainly  sufficient  in 
amount,  and  unburdened  with  any  conditions  which  the  debtor  has 
not  a  clear  right  to  impose.  See  Moore  v.  Norman  and  Bank  v. 
Hove,  supra. 

A  new  trial  must  be  granted  for  the  reason  above  stated.  ♦  *  * 
Order  reversed.  ,  ,»    .         ,,     J  t 


H  mAMAy  (U         J^'  I^ischarge  of  Contract  by  Breacji^*. 

1.  Renunciation  of  Contract 
(A)  Before  Performance  is  Due 


O'NEILL  v.  SUPREME  COUNCIL  A.  L.  H. 

(Supreme  Court  of  New  Jersey,  1904.    70  N.  J.  Law,  410,  57  Atl.  4G3, 
1  Ann.  Cas.  422.) 

Action  by  Thomas  O'Neill  against  the  Supreme  Council  American 
Legion  of  Honor. 

4  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  239,  240, 
243-249. 


DISCHAEGE    OF   CONTRACT   BY   BREACH  379 

Pitney,  J.'  The  declaration  avers  that  in  the  year  1891  the  de- 
fendant was  a  corporation  of  the  state  of  Massachusetts,  engaged  in 
business  in  the  state  of  New  Jersey,  and  made  a  contract  under  seal 
with  the  plaintiff,  known  as  a  benefit  certificate  (set  forth  in  full  in 
the  pleading),  whereby  it  was  certified  that  the  plaintiff  was  a  com- 
panion of  the  American  Legion  of  Honor,  and  thereupon,  in  consid- 
eration of  full  compliance  by  him  with  all  by-laws  of  the  supreme 
council  of  that  order,  then  existing  or  thereafter  adopted,  and  the 
conditions  in  the  benefit  certificate  contained,  the  supreme  council 
agreed  to  pay  to  the  plaintiff's  sister,  in  trust  for  his  six  children, 
the  sum  of  $5,000,  upon  satisfactory  proof  of  the  plaintiff's  death 
while  in  good  standing  upon  the  books  of  the  supreme  council.  It 
alleges  that  the  contract  was  made  in  consideration  of  the  payment 
by  the  plaintiff  of  the  assessments  or  premiums  which  might  from 
time  to  time  be  called  by  the  defendant.  It  avers  payment  by  the 
plaintiff  of  all  assessments  called,  and  performance  by  him  of  all  con- 
ditions, until  the  defendant  broke  the  contract  and  declared  the  same 
void.  It  sets  up  that  the  defendant  has  failed,  neglected,  and  refused  to 
carry  out  the  conditions  of  the  contract,  in  that  on  August  22,  1900, 
on  December  10,  1901,  and  on  divers  other  days  between  those  dates, 
the  defendant  declared  to  the  plaintiff  that  it  would  not  perform  the 
contract  or  pay  the  insurance  money  thereby  agreed  to  be  paid,  and 
that  upon  the  plaintiff's  death  the  beneficiaries  would  not  be  entitled 
to  receive  the  sum  of  $5,000,  and  that  the  defendant  would  not  pay 
the  same,  but  that  the  beneficiaries  should  receive  only  $2,000.  The 
declaration  further  avers  that  upon  the  breach  of  the  contract  by  the 
defendant  as  aforesaid,  and  upon  the  several  dates  mentioned  above, 
the  plaintiff  tendered  to  the  defendant  the  same  monthly  assessments 
and  payments  as  had  been  theretofore  called  or  required  by  the  de- 
fendant upon  the  contract,  and  the  plaintiff'  oft'ered  and  agreed  to 
continue  making  such  payments,  and  in  all  respects  offered  to  comply 
with  the  terms  and  conditions  of  the  contract;  yet  the  defendant  re- 
fused to  accept  from  the  plaintiff  the  assessments  so  tendered,  and 
refused  to  recognize  the  contract  or  continue  it  in  force;  whereby 
the  plaintiff  has  sustained  damages,  to  recover  which  the  action  is 
brought.  The  defendant  has  pleaded  the  general  issue  and  five  special 
pleas.    To  each  of  the  latter  the  plaintiff  demurs. 

The  first  question  for  consideration  is  whether  the  declaration  sets 
forth  a  good  cause  of  action.  The  cause  of  action  asserted  is  not  the 
right  to  recover  the  sum  named  in  the  benefit  certificate  according 
to  its  terms,  but  to  recover  damages  for  a  renunciation  of  the  agree- 
ment, by  the  party  bound,  in  advance  of  the  time  set  for  performance. 
Numerous  reported  decisions  have  laid  down  the  doctrine  that  where 
a  contract  embodies  mutual  and  interdependent  conditions  and  obli- 
gations, and  one  parly  either  disables  himself   from  performing,  or 

6  A  portion  of  the  opIiiiMii  I3  omillcd. 


380  DISCHARGE   OP   CONTRACT 

prevents  the  other  from  performing,  or  repudiates  in  advance  his  ob- 
ligations under  the  contract,  and  refuses  to  be  longer  bound  thereby, 
communicating  such  repudiation  to  the  other  party,  the  latter  party 
is  not  only  excused  from  further  performance  on  his  part,  but  may 
at  his  option  treat  the  contract  as  terminated  for  all  purposes  of  per- 
formance, and  maintain  an  action  at  once  for  damages  occasioned 
by  such  repudiation,  without  awaiting  the  time  fixed  by  the  contract 
for  performance  by  the  defendant.  This  doctrine  has  been  followed 
in  the  English  courts  for  more  than  half  a  century.  Hochster  v.  De 
La  Tour  (1853)  2  El.  &  Black.  678,  22  L.  J.  Q.  B.  455,  17  Jur.  972, 
6  Enghsh  Ruling  Cases,  576;  Corts  v.  Ambergate,  etc.,  Ry.  Co.  (1851) 
17  Ad.  &  El.  (N.  S.)  Q.  B.  127,  20  L.  J.  Q.  B.  460,  15  Jur.  877; 
Avery  v.  Bowden  (1855)  5  El.  &  Black.  714,  6  El.  &  Black.  953; 
Danube,  etc.,  Ry.  Co.  v.  Xenos  (1861)  11  Com.  Bench  (N.  S.)  152, 
31  L.  J.  Q.  B.  84,  5  L.  T,  527,  affirmed  on  appeal  in  Exchequer  Cham- 
ber, 13  Com.  Bench  (N.  S.)  825,  31  L.  J.  C.  P.  284,  8  Jur.  (N.  S.)  439; 
Frost  V.  Knight  (1872)  L.  R.  7  Exch.  Ill,  41  L.  J.  Ex.  78,  26  L.  T. 
77;  Johnstone  v.  Milling  (1886)  L.  R.  16  Q.  B.  Div.  460,  55  L.  J. 
O.  B.  162,  54  L.  T.  629;  Synge  v.  Synge  (1894)  1  Q.  B.  466,  63  L. 
J.  Q.  B.  202,  70  L.  T.  221. 

In  the  leading  case  of  Hochster  v.  De  La  Tour,  Crompton,  J.,  said, 
during  the  argument:  "When  a  party  announces  his  intention  not  to 
fulfill  the  contract,  the  other  side  may  take  him  at  his  word  and  re- 
scind the  contract.  That  word  'rescind'  implies  that  both  parties  have 
agreed  that  the  contract  shall  be  at  an  end  as  if  it  had  never  been. 
But  I  am  inclined  to  think  that  the  party  may  also  say:  'Since  you 
have  announced  that  you  will  not  go  on  with  the  contract,  I  will  con- 
sent that  it  shall  be  at  an  end  from  this  time  (meaning,  of  course,  for 
purposes  of  further  performance) ;  but  I  will  hold  you  liable  for  the 
damage  I  have  sustained,  and  I  will  proceed  to  make  that  damage  as 
little  as  possible  by  making  the  best  use  I  can  of  my  liberty.'  This 
is  the  principle  of  those  cases  in  which  there  has  been  a  discussion 
as  to  the  measure  of  damages  to  which  a  servant  is  entitled  on  a 
wrongful  dismissal."  And  Lord  Campbell,  C.  J.,  in  delivering  judg- 
ment, said :  "It  seems  strange  that  the  defendant,  after  renouncing  the 
contract  and  absolutely  declaring  that  he  will  never  act  under  it, 
should  be  permitted  to  object  that  faith  is  given  to  his  assertion,  and 
that  an  opportunity  is  not  left  to  him  of  changing  his  mind.  *  *  * 
The  man  who  wrongfully  renounces  a  contract  into  which  he  has  de- 
liberately entered  cannot  justly  complain  if  he  is  immediately  sued 
for  a  compensation  in  damages  by  the  man  whom  he  has  injured; 
and  it  seems  reasonable  to  allow  an  option  to  the  injured  party  either 
to  sue  immediately  or  to  wait  till  the  time  when  the  act  was  to  be 
done,  still  holding  it  as  prospectively  binding  for  the  exercise  of  this 
option,  which  may  be  advantageous  to  the  innocent  party,  and  cannot 
be  prejudicial  to  the  wrongdoer." 


DISCHAEGE    OF   CONTRACT   BY    BREACH  381 

The  same  rule  prevails  in  the  Supreme  Court  of  the  United  States. 
Roehm  V.  Horst  (1899)  178  U.  S.  1,  20  Sup.  Ct.  780,  44  L.  Ed.  953, 
where  numerous  previous  decisions  of  the  same  court  are  cited.  And 
the  great  weight  of  authority  in  the  state  courts  is  to  the  same  effect . 
Burtis  V.  Thompson,  42  N.  Y.  246,  1  Am.  Rep.  516;  Howard  v.  Daly, 
61  N.  Y.  362,  374,  19  Am.  Rep.  285 ;  Ferris  v.  Spooner,  102  N.  Y. 
10,  5  N.  E.  773 ;  Windmuller  v.  Pope,  107  N.  Y.  674,  14  N.  E.  436 ; 
Nichols  V.  Scranton  Steel  Co.  137  N.  Y.  471,  487,  33  N.  E.  561 ; 
Kadish  v.  Young,  108  111.  170,  177,  43  Am.  Rep.  548;  Rocbling's 
Sons  Co.  V.  Lock  Stitch  Fence  Co.,  130  III.  660,  22  N.  E.  518;  Lake 
Shore,  etc.,  Ry.  Co.  v.  Richards,  152  111.  59,  38  N.  E.  773,  30  L.  R. 
A.  33 ;  Kurtz  v.  Frank,  76  Ind.  594,  40  Am.  Rep.  275 ;  Crabtree  v. 
IMessersmith,  19  Iowa,  179;  McCormick  v.  Basal,  46  Iowa,  235  ;  Hos- 
mer  v.  Wilson,  7  Mich.  294,  304,  74  Am.  Dec.  716;  Piatt  v.  Brand, 
26  Mich.  173;  Hocking  v.  Hamilton,  158  Pa.  107,  27  Atl.  836;  Davis 
V.  School  Furniture  Co.,  41  W.  Va.  717,  24  S.  E.  630;  Remy  v. 
Olds,  88  Cal.  537,  26  Pac.  355 ;  Sullivan  v.  McMillan,  26  Fla.  543, 
557,  8  South.  450;  Thompson  v.  Kyle,  39  Fla.  582,  599,  23  South.  12, 
63  Am.  St.  Rep.  193 ;  Fox  v.  Kitton,  19  111.  519,  534;  Follansbce  v.  Ad- 
ams, 86  111.  13;  Adams  v.  Byerly,  123  Ind.  368,  24  N.  E.  130;  Kalk- 
'  hoff  v.  Nelson,  60  Minn.  284,  62  N.  W.  332;  Bignall  v.  Manufac- 
turing Co.,  59  Mo.  App.  673,  682;  Manufacturing  Co.  v.  ^IcCord, 
65  I^o.  App.  507 ;  Burke  v.  Shaver.  92  Va.  345,  23  S.  E.  749 ;  Lee 
V.  Mutual  Life  Ass'n,  97  Va.  160,  33  S.  E.  556. 

The  doctrine  of  Hochster  v.  De  La  Tour  is  generally  recognized 
bv  the  text-writers  as  established  law:  7  Am.  &  Eng.  Encycl.  Law 
(id  Ed.)  Title  "Contracts,"  p.  150;  Bish.  Cont.  §  1428;  2  Chitt. 
Cont.  (11th  Am.  Ed.)  1067,  1079;  2  Pars.  Cont.  (8th  Ed.)  781  (*667) ; 
Todd  V.  Gamble,  148  N.  Y.  382,  42  N.  E.  982,  52  L.  R.  A.  225 ;  Benj. 
Sales  (Corb.  Ed.)  §§  859,  860. 

So  far  as  observed,  the  only  states  dissenting  from  the  doctrine  are 
Massachusetts,  Nebraska,  and  North  Dakota.  Daniels  v.  Newton. 
114  Mass.  530,  19  Am.  Rep.  384;  Carstens  v.  McDonald,  38  Neb. 
858  57  N.  W.  757 ;  King  v.  Waterman,  55  Neb.  324,  75  N.  W.  830 ; 
Stanford)  v.  McGill,  6  N.  D.  536,  72  N.  W.  938,  38  L.  R.  A.  760. 
The  latter  decision  is  based  partly,  and  the  Nebraska  decisions  prm- 
cipally,  upon  the  authority  of  Daniels  v.  Newton,  which  is  the  leading 
case  upon  this  side  of  the  question.  It  is  there  held  that  a  mere  re- 
fusal of  performance  by  the  promisor,  before  the  time  for  perform- 
ance arrives,  cannot  form  a  ground  of  damages.  But  in  Parker  v. 
Russell,  133  Mass.  74,  it  was  held  a  refusal  of  performance  of  a 
substantial  part  of  the  contract,  after  the  time  for  entering  upon  per- 
formance has  begun,  entitles  the  injured  party  to  treat  the  entire  con- 
tract as  absolutely  broken,  and  to  recover  immcdintely  his  damages, 
based  upon  the  whole  value  of  the  contract,  including  comixinsation 
for  nonperformance  in  the  future  as  well  as  in  the  past.  In  Ballou 
V.  Billings,  136  Mass.  307,  it  was  held  that,  for  i)urposcs  of  rescission 


382  DISCHARGE  OF  CONTRACT 

by  the  promisee,  notice  that  the  promisor  will  not  perform  has  the- 
same  effect  as  an  actual  breach.  These  and  other  cases  show  that, 
even  in  Massachusetts,  the  reasoning  on  which  the  decision  in  Daniels 
V.  Newton  was  based  is  hardly  carried  to  its  logical  conclusion.  Jew- 
ett  V.  Brooks,  134  Mass.  505;  Lowe  v.  Harwood,  139  Mass.  133, 
29  N.  E.  538;  Paige  v.  Barrett,  151  Mass.  67,  23  N.  E.  725;  Whitten 
V.  New  England,  etc.,  Co.,  165  Mass.  343,  43  N.  E.  121.  Upon  the 
precise  point  now  presented,  however,  the  authority  of  Daniels  v. 
Newton  is  still  recognized  in  Massachusetts,  as  appears  from  a  recent 
decision  in  a  case  that  is  "on  all  fours"  with  the  one  now  before  us. 
Porter  v.  American  Legion  of  Honor  (1903)  183  Mass.  326,  67  N.  E. 
238. 

The  general  question  of  repudiation  of  contracts  is  ably  discussed 
by  Prof.  Williston  in  14  Harv.  Law  Rev.  317,  421,  with  an  ample 
citation  of  cases.  He  combats  the  doctrine  of  Hochster  v.  De  La 
Tour,  while  conceding  that  it  is  sustained  by  the  great  weight  of 
authority. 

There  seems  to  be  no  controlling  decision  in  our  own  state ;  at 
least,  no  reported  case  that  is  precisely  in  point.  In  Parker  v.  Pettit, 
43  N.  J.  Law,  512,  which  was  an  action  brought  by  the  purchaser  to 
recover  damages  for  refusal  to  deliver  goods  purchased,  the  vendor, 
prior  to  the  time  of  performance,  had  declared  his  intention  not  to 
perform,  and  had  likewise  disabled  himself  from  performing  by  sell- 
ing the  goods  to  another.  This  court  held  that  thereby  the  vendor 
had  dispensed  with  the  performance  of  conditions  precedent  by  the 
purchaser,  and  that  neither  a  demand  of  performance  nor  a  tender  of 
the  consideration  money  was  necessary.  It  was  intimated  by  Mr. 
Justice  Depue,  in  the  opinion,  that  the  defendant's  refusal  of  per- 
formance, before  the  time  for  performance  arrived,  did  not  of  itself 
am.ount  to  a  breach  of  the  contract  so  as  to  authorize  a  suit  before 
the  time  for  performance ;  but  this  was  obiter  dictum,  for  the  suit 
was  in  fact  brought  after  that  time.  In  Vickers  v.  Electrozone  Com- 
mercial Co.,  67  N.  J.  Law,  665,  at  page  671,  52  Atl.  467,  at  page 
469,  Judge  Vredenburgh,  speaking  for  the  Court  of  Errors  &  Ap- 
peals, declared  that  "a  party  injured  by  the  repudiation  of  a  contract 
by  the  other  party,  also  bound  by  it  has  an  election  of  remedies  he 
may  pursue,  ^one  of  which  is  that  he  may  treat  the  repudiation  as 
putting  an  end  to  the  contract  for  all  purposes  of  performance,  and 
sue  for  the  profits  he  would  have  realized  if  he  had  not  been  prevent- 
ed) from  performing,  and  the  contract  would  be  continued  in  force  for 
that  purpose." 

It  must  be  conceded  that  the  adoption  of  this  rule  was  not  neces- 
sary for  the  decision  of  the  case,  which  was  an  action  to  recover  dam- 
ages for  the  past  breach  of  a  single  covenant,  and  was  not  based  upon 
a  repudiation  of  the  entire  agreement.  But  as  a  pronouncement  by 
our  court  of  last  resort,  agreeing,  as  it  does,  with  the  English  and 
most  of  the  American  decisions,  the  expression  quoted  is  entitled  to 


DISCHARGE   OF  CONTEACT   BY   BEEACH  383 

great  weight  in  this  court.  Upon  the  whole,  we  are  satisfied  that 
the  doctrine  of  Hochster  v.  De  La  Tour  is  well  founded  in  principle 
as  well  as  supported  by  authority.  We  are  also  clear  that  it  applies 
to  such  a  contract  as  the  one  in  suit,  and  that  the  declaration  sets 
forth  a  renunciation  so  clear  and  unequivocal  as  to  give  ground  for 
an  action,  it  being  averred  that  the  defendant  has  declared  to  the 
plaintiff  that  it  will  not  perform  the  contract,  and  has  refused  to  ac- 
cept the  monthly  assessments  tendered  by  the  plaintiff  in  performance 
of  conditions  precedent  on  his  part.  ♦  ♦  ♦ 
The  plaintiff  is  entitled  to  judgment 

IhMj^J  M^^'  "^^^  ^"  ^^'^  CoHr^^  of  Performance 

^'  ■  WIGENT  V.  MARRS. 

(Supreme  Court  of  Michigan,  1902.     130  Mich.  GOO.  90  N.  W.  423.) 

Action  by  Gardner  A.  Wigent  against  Thomas  Marrs,  administrator 
of  the  estate  of  Chloe  R.  McClung,  deceased.  There  was  a  judgment 
in  favor  of  defendant,  and  plaintiff  brings  error. 

Hooker,  C.  J.  Plaintiff  recovered  a  verdict  and  judgment  in  an 
action  of  assumpsit  before  a  justice  of  the  peace,  which  was  reversed 
in  the  circuit  court  on  appeal.  The  declaration  was  upon  the  common 
counts.  The  facts  were  undisputed,  and  in  substance  are  as  follows : 
In  May,  1901,  defendant's  intestate  gave  a  written  order  to  plaintiff's 
agents  for  a  monument  to  be  erected  upon  her  lot  in  the  cemetery  at 
the  agreed  price  of  $100,  the  same  to  be  completed  between  that  date 
and  June  30,  1901,  unless  unforeseen  causes  should  prevent,  and  in 
that  event  as  soon  thereafter  as  practicable.  It  was  to  be  set  upon 
a  foundation  to  be  erected  by  her.  The  contract  was  approved  by  the 
plaintiff  on  May  14th,  of  which  Mrs.  McClung  was  notified,  and  at 
the  same  time  the  monument  was  ordered  to  be  made  at  the  quarry. 
The  latter  part  of  June  the  plaintiff  notified  her  to  get  the  foundation 
ready,  in  response  to  which  she  wrote  him  that  he  need  not  bring 
that  monument,  as  it  did  not  come  according  to  agreement.  On  July 
5th  plaintiff  replied,  stating  that  the  monument  was  well  under  way, 
and  he  could  not  allow  her  to  countermand  her  order ;  that  it  would 
be  delivered  as  .soon  as  completed,  and  would  be  strictly  according  to 
contract,  and  she  was  requested  to  have  her  foundation  built  as  soon 
as  possible.  In  response  to  this  she  wrote :  "You  have  not  dnne  ac- 
cording to  agreement  at  all.  You  was  to  have  it  up  by  the  30th  of 
June  at  the  farthest.  Wc  are  not  obliged  to  wait  your  motion,  so,  if 
you  bring  it,  you  may  take  it  back."    The  plaintiff  had  the  monument 


384  DISCHARGE  OF  CONTRACT 

completed  and  set  up  upon  a  foundation  erected  by  himself.  This 
action  was  brought  to  recover  the  contract  price  and  $1.50  for  the 
foundation,  with  interest  from  August  23,  1900. 

It  was  shown  that  the  delay  was  caused  by  unforeseen  circumstanc- 
es. No  complaint  was  made  of  the  workmanship,  which  was  such  that 
the  monument  could  not  be  used  for  any  other  purpose.  The  defend- 
ant claims  that  the  plaintiff,  upon  receipt  of  Mrs.  McClung's  letter, 
had  no  legal  right  to  complete  the  contract  and  recover  the  price; 
that  his  only  remedy  was  to  recover  in  damages  for  a  breach  of  the 
contract.  Plaintiff,  on  the  other  hand,  claims  that  it  was  competent 
to  treat  the  contract  as  performed,  and  that  he  is  entitled  to  recover 
the  contract  price  upon  the  common  counts.  It  is  undisputed  that 
defendant  unqualifiedly  renounced  this  contract  before  the  monument 
was  completed,  and  forbade  its  completion  and  erection  upon  her 
premises.  Many  authorities  hold  that  she  had  the  right  to  do  this, 
and  thereafter  plaintiff's  right  of  recovery  would  be  limited  to  dam- 
ages for  the  breach  of  the  contract  involved  in  the  renunciation.  In 
Mechem,  Sales,  §  1091,  the  author  says:  "The  law  is  well  settled  that 
a  party  to  an  executory  contract  may  always  stop  performance  on 
the  other  side  by  an  explicit  direction  to  that  effect,  though  he  there- 
by subjects  himself  to  the  payment  of  such  damages  as  will  compen- 
sate the  other  for  the  loss  he  has  sustained  by  reason  of  having  his 
performance  checked  at  that  stage  in  its  progress."  "The  contract  is 
not  rescinded,  but  broken ;  and,  immediately  the  other  party  has  the 
right  to  deem  it  in  force  for  the  purpose  of  the  recovery  of  his  dam- 
ages, he  is  under  no  obligation  for  that  purpose  to  tender  complete 
performance,  nor  has  he  the  right  to  unnecessarily  enhance  the  dam- 
ages by  proceeding  after  the  countermand  to  finish  his  undertaking." 
Id.  §  1092. 

This  subject  is  discussed  in  the  case  of  Hosmer  v.  Wilson,  7  Mich., 
at  page  305,  74  Am.  Dec.  716,  where  Mr.  Justice  Christiancy  says: 
"And  it  is  certainly  very  questionable  whether  the  party  thus  notified 
has  a  right  to  go  on  after  such  notice  to  increase  the  amount  of  his  own 
damages.  In  Clark  v.  Marsiglia,  1  Denio  (N.  Y.)  317, 43  Am.  Dec.  670, 
it  was  held  he  had  no  such  right,  and  that  the  employer  has  a  right 
(in  a  contract  for  work  and  labor)  to  stop  the  work,  if  he  choose,  sub- 
jecting himself  to  the  consequences  of  a  breach  of  his  contract;  and 
that  the  workman,  after  notice  to  quit  work,  has  no  right  to  continue 
his  labor,  and  recover  pay  for  it.  This  doctrine  is  fully  approved  in 
Derby  v.  Johnson,  21  Vt.  21."  Mr.  Justice  Christiancy  adds  that: 
"This  would  seem  to  be  good  sense,  and  therefore  sound  law;  and 
it  would  seem  that  any  other  rule  must  tend!  to  the  injury,  and  in 
many  cases  to  the  ruin,  of  all  parties."  In  the  case  of  Danforth  v. 
Walker,  37  Vt.  244,  the  court  said  of  a  similar  case:  "While  a  con- 
tract is  executory,  a  party  has  the  power  to  stop  the  performance  on 
the  other  side  by  an  explicit  direction  to  that  effect  by  subjecting  him- 
self to  such  damages  as  will  compensate  the  other  party  for  being 


DI8CHAEGE    OF   CONTEACT   BY   BEEACH  3S5 

Stopped  in  the  performance  on  his  part  at  that  point  or  stage  in 
the  execution  of  the  contract.  The  party  thus  forbidden  cannot  after- 
wards go  on  and  thereby  increase  the  damages,  and  then  recover  such 
increased  damages  of  the  other  party."  See,  also,  Butler  v.  Butler, 
77  N.  Y.  472,  33  Am.  Rep.  648;  Clause  v.  Printing  Press  Co.,  118 
111.  612,  9'  N.  E.  201. 

We  are  cited  by  plaintiff's  counsel  to  the  case  of  Black  v.  Herbert, 
111  Mich.  638,  70  N.  W.  138,  as  a  case  on  all  fours  with  the  present 
case,  but  we  think  it  is  readily  distinguishable.  In  that  case,  after  re- 
nunciation the  parties  met  by  appointment,  and  the  plaintiff  was  per- 
mitted to  alter  and  set  up  the  monument.  It  became,  therefore,  a 
question  for  the  jury  whether  or  not  the  contract  had  been  per- 
formed. Renunciation  must  be  more  than  mere  idle  talk  of  nonper- 
formance; it  must  be  a  distinct,  unequivocal,  and  absolute  refusal  to 
receive  performance  or  to  perform  on  his  own  part.  Mechem,  Sales, 
§  1087.  The  party  attempting  to  renounce  may  withdraw  his  re- 
nunciation and!  have  the  contract  performed  (Id.  §  1090),  and  it  would 
seem  that  the  defendant  in  that  case  did  so. 

There  are  only  two  theories  upon  which  the  common  counts  could 
be  relied  upon  in  this  case :  First,  upon  the  theory  that  the  contract 
had  been  performed,  and  that  the  contract  price  was  therefore  recov- 
erable ;  and,  second,  for  the  work  and  material  used  in  the  foundia- 
tion  built  by  the  plaintiff.  The  undisputed  facts  show  that  the  con- 
tract was  not  performed  on  receipt  of  the  renunciation,  and  there 
could  be  no  recovery  for  the  erection  of  the  foundation,  because  the 
plaintiff  was  never  requested  to  build  it,  but,  on  the  contrary,  was 
prohibited  from  doing  anything  further  in  performance  of  the  con- 
tract. The  only  redress  that  the  plaintiff  would  be  entitled  to  recover 
would  be  damages  for  the  breach  of  the  contract  if  renunciation 
should  be  found  to  be  unwarranted,  which  does  not  appear. 

It  follows  that  the  judgment  must  be  affirmed. 
Thbockm.Cont. — 25 


//■■c  6-.:^  y:-'-.  ...         ■-•'    Ad/ ^"^ 

386  DISCHARGE  OF  CONTRACT  /        / 


/t\4^  ^^^  2.  Failure  of  Performance 

ili^  ■h'ix^i    Jif-^^^'         (A)  Independent  Promises 

Q  (a)  Absolute  Promises  //     £^j-<!^^,^tA-'<.,.^ . 


See  Morton  v.  Lamb,  post,  p.  396. 


(b)  PBoinsEs  THE  Pekfokmance  of  Which  is  Divisiblb 


NORRINGTON  v.  WRIGHT  et  al. 

(Supreme  Court  of  the  United  States.  1SS5.     115  U.  S.  188,  6  Sup. 
Ct.  12,  29  L.  Ed.  366.) 

In  error  to  the  circuit  court  of  the  United  States  for  the  Eastern 
district  of  Pennsylvania. 

The  facts  fully  appear  in  the  following  statement  by  Mr.  Justice 
Gray  : 

This  was  an  action  of  assumpsit,  brought  by  Arthur  Norrington,  a 
citizen  of  Great  Britain,  trading  under  the  name  of  A.  Norrington  & 
Co.,  against  James  A.  Wright  and  others,  citizens  of  Pennsylvania, 
trading  under  the  name  of  Peter  Wright  &  Sons,  upon  the  following 
contract : 

"Philadelphia,  January  19,  1880. 

"Sold  to  Messrs.  Peter  Wright  &  Sons,  for  account  of  A.  Norring- 
ton &  Co.,  London:  Five  thousand  (5,000)  tons  old  T  iron  rails,  for 
shipment  from  a  European  port  or  ports,  at  the  rate  of  about  one 
thousand  (1,000)  tons  per  month,  beginning  February,  1880,  but  whole 
contract  to  be  shipped  before  August  1,  1880,  at  forty- five  dollars 
($45.00)  per  ton  of  2,240  lbs.  custom-house  weight,  ex  ship  Philadel- 
phia. Settlement,  cash,  on  presentation  of  bills  accompanied  by  cus- 
tom-house certificate  of  weight.  Sellers  to  notify  buyers  of  shipments 
with  vessels'  names  as  soon  as  known  by  them.  Sellers  not  to  be  com- 
pelled to  replace  any  parcel  lost  after  shipment.  Sellers,  when  possi- 
ble, to  secure  to  buyers  right  to  name  discharging  berth  of  vessels  at 
Philadelphia.  Edward  J.  Etting,  Metal  Broker." 

The  declaration  contained  three  counts.  The  first  count  alleged 
the  contract  to  have  been  for  the  sale  of  about  5,000  tons  of  T  iron 
rails,  to  be  shipped  at  the  rate  of  about  1,000  tons  a  month,  beginning 
in  February,  and  ending  in  July,  1880.     The  second  count  set  forth 


DISCHAEGE   OF   CONTEACT   BY   BEEACH  387 

the  contract  verbatim.  Each  of  these  two  counts  alleged  that  the 
plaintiffs  in  February,  March,  April,  May,  June,  and  July  shipped  the 
goods  at  the  rate  of  about  1,000  tons  a  month,  and  notified  the  ship- 
ments to  the  defendants;  and  further  alleged  the  due  arrival  of  the 
goods  at  Philadelphia,  the  plaintift''s  readiness  to  deliver  the  goods 
and  bills  thereof-,  with  custom-house  certificates  of  weight,  according 
to  the  contract,  and  the  defendants'  refusal  to  accept  them.  The  third 
count  differed  from  the  second  only  in  averring  that  400  tons  were 
shipped  by  the  plaintiff  in  February  and  accepted  by  the  defendants, 
and  that  the  rest  was  shipped  by  the  plaintiff's,  at  the  rate  of  about 
1,000  tons  a  month,  in  March,  April,  May,  June,  and  July.  The  de- 
fendants pleaded  non  assumpsit. 

The  material  facts  proved  at  the  trial  were  as  follows : 
The  plaintiff  shipped  from  various  European  ports  400  tons  by  one 
vessel  in  the  last  part  of  February,  885  tons  by  two  vessels  in  March, 
1,571  tons  by  five  vessels  in  April,  850  tons  by  three  vessels  in  May, 
1,000  tons  by  two  vessels  in  June,  and  300  tons  by  one  vessel  in  July, 
and  notified  to  the  defendants  each  shipment.  The  defendants  re- 
ceived and  paid  for  the  February  shipment  upon  its  arrival  in  March, 
and  in  April  gave  directions  at  what  wharves  the  March  shipments 
should  be  discharged  on  their  arrival,  but  on  May  14th,  about  the  time 
of  the  arrival  of  the  March  shipments,  and  having  been  then  for  the 
first  time  informed  of  the  amounts  shipped  in  February,  March,  and 
April,  gave  Etting  written  notice  that  they  should  decline  to  accept 
the  shipments  made  in  March  and  April,  because  none  of  them  were 
in  accordance  with  the  contract ;  and  in  answer  to  a  letter  from  him 
of  May  16th,  wrote  him  on  May  17th,  as  follows:  "We  are  advised 
that  what  has  occurred  does  not  amount  to  an  acceptance  of  the  iron 
under  the  circumstances,  and  the  terms  of  the  contract.  You  had  a 
right  to  deliver  in  parcels,  and  we  had  a  right  to  expect  the  stipulated 
quantity  would  be  delivered  until  the  time  was  up  in  which  that  was 
possible.  Both  delivering  and  receiving  were  thus  far  conditional  on 
there  being  thereafter  complete  delivery  in  due  time  and  of  the  stipu- 
lated article.  On  the  assumption  that  this  time  had  arrived,  and  that 
you  had  ascertained  that  you  did  not  intend  to,  or  could  not,  make  any 
further  deliveries  for  the  February  and  March  shipments,  we  gave 
you  the  notice  that  we  declined  accepting  those  deliveries.  As  to  April, 
it  is  too  plain,  we  suppose,  to  require  any  remark.  If  we  are  mistaken 
as  to  our  obligation  for  the  February  and  March  shipments,  of  course 
we  must  abide  the  consequences ;  but  if  we  are  right,  you  have  not 
performed  your  contract,  as  you  certainly  have  not  for  the  April  ship- 
ments. There  is  then  the  very  serious  and  much  debated  question,  as 
we  are  advised,  whether  the  failure  to  make  the  stipulated  shipments 
in  February  or  March  has  absolved  us  from  the  contract.  If  it  docs, 
we  of  course  will  avail  ourselves  of  this  advantage." 

On  May  18th  Etting  wrote  to  the  defendants,  insisting  on  their  lia- 
bility for  both  past  and  future  shii)mcnts,  and  saying,  among  other 


388  DISCHARGE  OF   CONTRACT 

things:  "In  respect  to  the  objection  that  there  had  not  been  a  com- 
plete delivery  in  due  time  of  the  stipulated  article,  I  beg  to  call  your 
attention  to  the  fact  that  while  the  contract  is  for  five  thousand  tons, 
it  expressly  stipulates  that  deliveries  may  be  made  during  six  months, 
and  that  they  are  only  to  be  at  the  rate  of  about  one  thousand  tons 
per  month."  "As  to  April,  while  it  seems  to  me  'too  plain  to  require 
any  remark,'  I  do  not  see  how  it  can  seem  so  to  you,  unless  you 
intend  to  accept  the  rails.  If  you  object  to  taking  all  three  shipments 
made  in  that  month,  I  shall  feel  authorized  to  deliver  only  two  of  the 
cargoes,  or  for  that  matter,  to  make  the  delivery  of  precisely  one 
thousand  tons.  But  I  think  I  am  entitled  to  know  definitely  from 
you  whether  you  intend  to  reject  the  April  shipments,  and,  if  so,  upon 
what  ground,  and  also  whether  you  are  decided  to  reject  the  remain- 
ing shipments  under  the  contract.  You  say  in  your  last  paragraph 
that  you  shall  avail  yourselves  of  the  advantage,  if  you  are  absolved 
from  the  contract;  but,  as  you  seem  to  be  in  doubt  whether  you  can 
set  up  that  claim  or  not,  I  should  like  to  know  definitely  what  is  your 
intention." 

On  May  19th  the  defendants  replied:  "We  do  not  read  the  con- 
tract as  you  do.  We  read  it  as  stipulating  for  monthly  shipments  of 
about  one  thousand  tons,  beginning  in  February,  and  that  the  six 
months'  clause  is  to  secure  the  completion  of  whatever  had  fallen 
short  in  the  five  months.  As  to  the  meaning  of  'about,'  it  is  settled  as 
well  as  such  a  thing  can  be;  and  certainly  neither  the  February, 
March,  nor  April  shipments  are  within  the  limits.  As  to  the  proposal 
to  vary  the  notices  for  April  shipments,  we  do  not  think  you  can  do 
this.  The  notice  of  the  shipments,  as  soon  as  known,  you  were  bound 
to  give,  and  cannot  afterwards  vary  it  if  they  do  not  conform  to  the 
contract.  Our  right  to  be  notified  immediately  that  the  shipments  were 
known  is  as  material  a  provision  as  any  other,  nor  can  it  be  changed 
now  in  order  to  make  that  a  performance  which  was  no  performance 
within  the  time  required."  "You  ask  us  to  determine  whether  we  will 
or  will  not  object  to  receive  further  shipments  because  of  past  de- 
faults. We  tell  you  we  will  if  we  are  entitled  to  do  so,  and  will  not 
if  we  are  not  entitled  to  do  so.  We  do  not  think  you  have  the  right 
to  compel  us  to  decide  a  disputed  question  of  law  to  relieve  you  from 
the  risk  of  deciding  it  yourself.  You  know  quite  as  well  as  we  do 
what  is  the  rule  and  its  uncertainty  of  application." 

On  June  10th  Etting  offered  to  the  defendants  the  alternative  of 
delivering  to  them  one  thousand  tons  strict  measure  on  account  of 
the  shipments  in  April.  This  oflfer  they  immediately  declined.  On 
June  15th  Etting  wrote  to  the  defendants  that  two  cargoes,  amounting 
to  221  tons,  of  the  April  shipments,  and  two  cargoes,  amounting  to  650 
tons,  of  the  May  shipments,  (designated  by  the  names  of  the  vessels,) 
had  been  erroneously  notified  to  them,  and  that  about  900  tons  had 
been  shipped  by  a  certain  other  vessel  on  account  of  the  May  ship- 
ments.   On  the  same  day  the  defendants  replied  that  the  notification 


DISCHAEGE   OF   CONTEACT   BY   BEEACH 


389 


as  to  April  shipments  could  not  be  corrected  at  this  late  date,  and 
after  the  terms  of  the  contract  had  long  since  been  broken.  From 
the  date  of  the  contract  to  the  time  of  its  rescission  by  the  defendants, 
the  market  price  of  such  iron  was  lower  than  that  stipulated  in  the 
contract,  and  was  constantly  falling.  After  the  arrival  of  the  cargoes, 
and  their  tender  and  refusal,  they  were  sold  by  Etting,  with  the  con- 
sent of  the  defendants,  for  the  benefit  of  whom  it  might  concern. 

At  the  trial  the  plaintiff  contended  (1)  that  under  the  contract  he 
had  six  months  in  which  to  ship  the  5,000  tons,  and  any  deficiency  in 
the  earlier  months  could  be  made  up  subsequently,  provided  that  the 
defendants  could  not  be  required  to  take  more  than  1,000  tons  in  any 
one  month;  (2)  that,  if  this  was  not  so,  the  contract  was  a  divisible 
contract,  and  the  remedy  of  the'defendants  for  a  default  in  any  month 
was  not  by  rescission  of  the  whole  contract,  but  only  by  deduction  of 
the  damages  caused  by  the  delays  in  the  shipments  on  the  part  of  the 
■  plaintiff.  But  the  court  instructed  the  jury  that  if  the  defendants,  at 
the  time  of  accepting  the  delivery  of  the  cargo  paid  for,  had  no  notice 
of  the  failure  of  the  plaintiff  to  ship  about  1,000  tons  in  the  month  of 
February,  and  immediately  upon  learning  that  fact  gave  notice  of 
their  intention  to  rescind,  the  verdict  should  be  for  them.  The  plain- 
tiff excepted  to  this  instruction,  and,  after  verdict  and  judgment  for 
the  defendants, 'sued  out  this  writ  of  error. 

Mr.  Justice  Gray,  after  stating  the  facts  as  above,  delivered  the 
opinion  of  the  court. 

In  the  contracts  of  merchants,  time  is  of  the  essence.  The  time  of 
shipment  is  the  usual  and  convenient  means  of  fixing  the  probable 
time  of  arrival,  with  a  view  of  providing  funds  to  pay  for  the  goods, 
or  of  fulfilling  contracts  with  third  persons.  A  statement  descriptive 
of  the  subject-matter,  or  of  some  material  incidenF,  such  as  the  time 
or  place  of  shipment,  is  ordinarily  to  be  regarded  as  a  warranty  in 
the  sense  in  which  that  term  is  used  in  insurance  and  maritime  law ; 
that  is  to  say,  a  condition  precedent  upon  the  failure  or  non-perform- 
ance of  which  the  party  aggrieved  may  repudiate  the  whole  contract. 
Behn  v.  Burness,  3  Best  &  S.  751 ;  Bowes  v.  Shand,  2  App.  Cas.  455 ; 
Lowber  v.  Bangs,  2  Wall.  728,  17  L.  Ed.  768;  Davison  v.  Von  Lingen, 
113  U.  S.  40,  5  Sup.  Ct.  346,  28  L.  Ed.  885. 

The  contract  sued  on  is  a  single  contract  for  the  sale  and  purchase 
of  5,000  tons  of  iron  rails,  shipped  from  a  European  port  or  ports  for 
Philadelphia.  The  subsidiary  provisions  as  to  shipping  in  different 
months,  and  as  to  paying  for  each  shipment  upon  its  delivery,  do  not 
split  up  the  contract  into  as  many  contracts  as  there  shall  be  ship- 
ments, or  deliveries  of  so  many  distinct  quantities  of  iron.  Mersey  S. 
&  I.  Co.  V.  Naylor,  9  App.  Cas.  434,  439.  The  further  provision  that 
the  sellers  shall  not  be  compelled  to  replace  any  parcel  lost  after  ship- 
ment, simply  reduces,  in  the  event  of  such  a  loss,  the  quantity  to  be 
delivered  and  paid  for.  The  times  of  shipment,  as  designated  in  the 
contract,  are  "at  the  rate  of  about   1,000  tons  per  month,  beginning 


390  DISCHARGE   OF   CONTRACT 

February,  1880,  but  whole  contract  to  be  shipped  before  August  1, 
1880."  These  words  are  not  satisfied  by  shipping  one-sixth  part  of 
the  5,000  tons,  or  about  833  tons,  in  each  of  the  six  months  which  be- 
gin with  February  and  end  with  July,  But  they  require  about  1,000 
tons  to  be  shipped  in  each  of  the  five  months  from  February  to  June 
inclusive,  and  allow  no  more  than  slight  and  unimportant  deficiencies 
in  the  shipments  during  those  months  to  be  made  up  in  the  month  of 
July. 

The  contract  is  not  one  for  the  sale  of  a  specific  lot  of  goods,  identi- 
fied by  independent  circumstances, — such  as  all  those  deposited  in  a  cer- 
tain warehouse,  or  to  be  shipped  in  a  particular  vessel,  or  that  may 
be  manufactured  by  the  seller,  or  may  be  required  for  use  by  the  buyer, 
in  a  certain  mill, — in  which  case  the  mention  of  the  quantity,  accom- 
panied by  the  qualification  of  "about,"  or  "more  or  less,"  is  regarded 
as  a  mere  estimate  of  the  probable  amount,  as  to  which  good  faith  is 
all  that  is  required  of  the  party  making  it.  But  the  contract  before  us 
comes  within  the  general  rule:  "When  no  such  independent  circum- 
stances are  referred  to,  and  the  engagement  is  to  furnish  goods  of 
a  certain  quality  or  character  to  a  certain  amount,  the  quantity  speci- 
fied is  material,  and  governs  the  contract.  The  addition  of  the  quali- 
fying words  'about,'  'more  or  less,'  and  the  like,  in  such  cases, -is  only 
for  the  purpose  of  providing  against  accidental  variations  arising  from 
slight  and  unimportant  excesses  or  deficiencies  in  number,  measure, 
or  weight."  Brawley  v.  U.  S.,  96  U.  S.  168,  171,  172,  24  L.  Ed.  622. 
The  seller  is  bound  to  deliver  the  quantity  stipulated,  and  has  no  right 
either  to  compel  the  buyer  to  accept  a  less  quantity,  or  to  require  him 
to  select  part  of  a  greater  quantity;  and  when  the  goods  are  to  be 
shipped  in  certain  proportions  monthly,  the  seller's  failure  to  ship  the 
required  quantity  in  the  first  month  gives  the  buyer  the  same  right  to 
rescind  the  whole  contract  that  he  would  have  had  if  it  had  been 
agreed  that  all  the  goods  should  be  delivered  at  once. 

The  plaintiff,  instead  of  shipping  about  1,000  tons  in  February  and 
about  1,000  tons  in  March,  as  stipulated  in  the  contract,  shipped  only 
400  tons  in  February,  and  885  tons  in  March.  His  failure  to  fulfill 
the  contract  on  his  part  in  respect  to  these  first  two  installments  jus- 
tified the  defendants  in  rescinding  the  whole  contract,  provided  they 
distinctly  and  seasonably  asserted  the  right  of  rescission.  The  defend- 
ants, immediately  after  the  arrival  of  the  March  shipments,  and  as 
soon  as  they  knew  that  the  quantities  which  had  been  shipped  in  Feb- 
ruary and  in  March  were  less  than  the  contract  called  for,  clearly  and 
positively  asserted  the  right  to  rescind,  if  the  law  entitled  them  to  do 
so.  Their  previous  acceptance  of  the  single  cargo  of  400  tons  shipped 
in  February  was  no  waiver  of  this  right,  because  it  rook  place  without 
notice  or  means  of  knowledge  that  the  stipulated  quantity  had  not 
been  shipped  in  February.  The  price  paid  by  them  for  that  cargo  be- 
ing above  the  market  value,  the  plaintiff  suft'ered  no  injury  by  the 


DISCHARGE   OF   CONTRACT   BY   BREACH  391 

omission  of  the  defendants  to  return  the  iron;  and  no  reliance  was 
placed  on  that  omission  in  the  correspondence  between  the  parties. 

The  case  wholly  differs  from  that  of  Lyon  v.  Bertram,  20  How.  149, 
15  L.  Ed.  847,  in  which  the  buyer  of  a  specific  lot  of  goods  accepted 
and  used  part  of  them  with  full  means  of  previously  ascertaining 
whether  they  conformed  to  the  contract.  The  plaintiff,  denying  the 
defendants'  right  to  rescind,  and  asserting  that  the  contract  was  still 
in  force,  was  bound  to  show  such  performance  on  his  part  as  entitled 
him  to  demand  performance  on  their  part,  and,  having  failed  to  do  so. 
cannot  maintain  this  action. 

For  these  reasons  we  are  of  opinion  that  the  judgment  below  should 
be  affirmed.  But  as  much  of  the  argument  at  the  bar  was  devoted  to 
a  discussion  of  the  recent  English  cases,  and  as  a  diversity  in  the  law, 
as  administered  on  the  two  sides  of  the  Atlantic,  concerning  the  inter- 
pretation and  effect  of  commercial  contracts  of  this  kind,  is  greatly  to 
be  deprecated,  it  is  proper  to  add  that  upon  a  careful  examination  of 
the  cases  referred  to  they  do  not  appear  to  us  to  establish  any  rule 
inconsistent  with  our  conclusion. 

In  the  leading  case  of  Hoare  v.  Rennie,  5  Hurl.  &  N.  19,  which  was 
an  action  upon  a  contract  of  sale  of  667  tons  of  bar  iron,  to  be  shipped 
from  Sweden  in  June,  July,  August,  and  September,  and  in  about 
equal  portions  each  month,  at  a  certain  price  payable  on  delivery,  the 
declaration  alleged  that  the  plaintiffs  performed  all  things  necessary  to 
entitle  them  to  have  the  contract  performed  by  the  defendants,  and 
were  ready  and  willing  to  perform  the  contract  on  their  part,  and  in 
June  shipped  a  certain  portion  of  the  iron,  and  within  a  reasonable 
time  afterwards  oft'ered  to  deliver  to  the  defendants  the  portion  so 
shipped,  but  the  defendants  refused  to  receive  it,  and  gave  notice  to 
the  plaintiffs  that  they  would  not  accept  the  rest.  The  defendants 
pleaded  that  the  shipment  in  June  was  of  about  20  tons  only,  and  that 
the  plaintiffs  failed  to  complete  the  shipment  for  that  month  according 
to  the  contract.  Upon  demurrer  to  the  pleas,  it  was  argued  for  the 
plaintiffs  that  the  shipment  of  about  one-fourth  of  the  iron  in  each 
month  was  not  a  condition  precedent,  and  that  the  defendants'  only 
remedy  for  a  failure  to  ship  that  quantity  was  by  a  cross-action.  But 
judgment  was  given  for  the  defendants.  Chief  Baron  Pollock  saying: 
"The  defendants  refused  to  accept  the  first  shipment,  because,  as 
they  say,  it  was  not  a  performance,  but  a  breach  of  the  contract. 
Whc^e  parties  have  made  an  agreement  for  themselves,  the  courts 
ought  not  to  make  another  for  them.  Here  they  say  that,  in  the  events 
that  have  happened,  one-fourth  shall  be  shipped  in  each  month,  and 
we  cannot  say  that  they  meant  to  accept  any  other  quantity.  At  the 
outset  the  plaintiffs  failed  to  tender  the  quantity  according  to  the  con- 
tract,— they  tendered  a  much  less  quantity.  The  defendants  had  a 
right  to  say  that  this  was  no  performance  of  the  contract,  and  they 
were  no  more  bound  to  accept  the  short  quantity  than  if  a  single  de- 
livery had  beet?  contracted  for.    Therefore  the  pleas  are  an  answer  to 


392 


DISCHARGE   OF  CONTRACT 


the  action."  5  Hurl.  &  N.  28.  So  in  Coddington  v.  Paleologo,  L.  R. 
I:  Exch.  193,  while  there  was  a  division  of  opinion  upon  the  ques- 
tion whether  a  contract  to  supply  goods,  "delivering  on  April  17th, 
complete  8th  May,"  bound  the  seller  to  begin  delivering  on  April  17th, 
all  the  judges  agreed  that  if  it  did,  and  the  seller  made  no  delivery  on 
that  day,  the  buyer  might  rescind  the  contract. 

On  the  other  hand  in  Simpson  v.  Crippin,  L.  R.  8  Q.  B.  14,  under 
a  contract  to  supply  from  6,000  to  8,000  tons  of  coal,  to  be  taken 
by  the  buyer's  wagons  from  the  seller's  colliery  in  equal  monthly  quan- 
tities for  12  months,  the  buyer  sent  wagons  for  only  150  tons  during 
the  first  month ;  and  it  was  held  that  this  did  not  entitle  the  seller  to 
annul  the  contract  and  decline  to  deliver  any  more  coal,  but  that 
his  only  remedy  was  by  an  action  for  damages.  And  in  Brandt  v. 
Lawrence,  1  Q.  B.  Div.  344,  in  which  the  contract  was  for  the  pur- 
chase of  4,500  quarters,  10  per  cent,  more  or  less,  of  Russian  oats, 
"shipment  by  steamer  or  steamers  during  February,"  or,  in  case  of 
ice  preventing  shipment,  then  immediately  upon  the  opening  of  naviga- 
tion, and  1,139  quarters  were  shipped  by  one  steamer  in  time,  and 
3,361  quarters  were  shipped  too  late,  it  was  held  that  the  buyer  was 
bound  to  accept  the  1,139  quarters,  and  was  liable  to  an  action  by  the 
seller  for  refusing  to  accept  them. 

Such  being  the  condition  of  the  law  of  England  as  declared  in 
the  lower  courts,  the  case  of  Bowes  v.  Shand,  after  conflicting  de- 
cisions in  the  queen's  bench  division  and  the  court  of  appeal,  was 
finally  determined  by  the  house  of  lords.  1  Q.  B.  Div.  470;  2  Q. 
B.  Div.  112;  2  App.  Cas.  455.  In  that  case,  two  contracts  were  made 
in  London,  each  for  the  sale  of  300  tons  of  "Madras  rice,  to  be  ship- 
ped at  Madras  or  coast  for  this  port  during  the  months  of  March 
^°d/or  April,  1874,  per  Rajah  of  Cochin."  The  600  tons  filled  8,200 
bags,  of  which  7,120  bags  were  put  on  board,  and  bills  of  lading  signed 
in  February;  and  for  the  rest,  consisting  of  1,030  bags  put  on  board 
in  February,  and  50  in  March,  the  bill  of  lading  was  signed  in  ]\Iarch. 
At  the  trial  of  an  action  by  the  seller  against  the  buyer  for  refusing 
to  accept  the  cargo,  evidence  was  given  that  rice  shipped  in  February 
would  be  the  spring  crop,  and  quite  as  good  as  rice  shipped  in  March 
or  April.  Yet  the  house  of  lords  held  that  theaction  could  not  be 
maintained,. because  the  meanmg  of"  the  Contract,  as  apparent  upon  Its 
face,  jvas  that  all  the  rice  must  be  put  on  board  in  March  and  April, 
or  in  one  of  those  months.  In  the  opinions  there  delivered  the  gen- 
eral principles  underlying  this  class  of  cases  are  most  clearly  and  sat- 
isfactorily stated.  It  will  be  sufficient  to  quote  a  few  passages  from 
two  of  those  opinions. 

Lord  Chancellor  Cairns  said:  "It  does  not  appear  to  me  to  be  a 
question  for  your  lordships,  or  for  any  court,  to  consider  whether 
that  is  a  contract  which  bears  upon  the  face  of  it  some  reason,  some 
explanation,  why  it  was  made  in  that  form,  and  why  the  stipulation 
is  made  that  the  shipment  should  be  during  these  particular  months. 


DISCHABGE   OF   CONTKACT   BY   BREACH  393 

It  is  a  mercantile  contract,  and  merchants  are  not  in  the  habit  of 
placing  upon  their  contracts  stipulations  to  which  they  do  not  attach 
some  value  and  importance."  2  App.  Cas.  463.  "If  it  be  admitted 
that  the  literal  meaning  would  imply  that  the  whole  quantity  must 
be  put  on  board  during  a  specified  time,  it  is  no  answer  to  that  literal 
meaning, — it  is  no  observation  which  can  dispose  of,  or  get  rid  of, 
or  displace,  that  literal  meaning, — to  say  that  it  puts  an  additional 
burden  on  the  seller  without  a  corresponding  benefit  to  the  purchaser ; 
that  is  a  matter  of  which  the  seller  and  purchaser  are  the  best  judges. 
Nor  is  it  any  reason  for  saying  that  it  would  be  a  means  by  which 
purchasers,  without  any  real  cause,  would  frequently  obtain  an  ex- 
cuse for  rejecting  contracts  when  prices  had  dropped.  The  non-fulfill- 
ment of  any  term  in  any  contract  is  a  means  by  which  a  purchaser 
is  able  to  get  rid  of  the  contract  when  prices  have  dropped ;  but  that 
is  no  reason  why  a  term  which  is  found  in  a  contract  should  not  be 
fulfilled."  Pages  465,  466.  "It  was  suggested  that  even  if  the  con- 
struction of  the  contract  be  as  I  have  stated,  still  if  the  rice  was  not 
put  on  board  in  the  particular  months,  that  would  not  be  a  reason 
which  would  justify  the  appellants  in  having  rejected  the  rice  alto- 
gether, but  that  it  might  afford  a  ground  for  a  cross-action  by  them 
if  they  could  show  that  any  particular  damage  resulted  to  them  from 
the  rice  not  having  been  put  on  board  in  the  months  in  question.  My 
lords,  I  cannot  think  that  there  is  any  foundation  whatever  for  that 
argument.  If  the  construction  of  the  contract  be  as  I  have  said,  that 
it  bears  that  the  rice  is  to  be  put  on  board  in  the  months  in  question, 
that  is  part  of  the  description  of  the  subject-matter  of  what  is  sold. 
What  is  sold  is  not  300  tons  of  rice  in  gross  or  in  general.  It  is 
300  tons  of  Madras  rice  to  be  put  on  board  at  Madras  during  the 
particular  months."  "The  plaintiff,  who  sues  upon  that  contract,  has 
not  launched  his  case  until  he  has  shown  that  he  has  tendered  that 
thing  which  has  been  contracted  for,  and  if  he  is  unable  to  show  that, 
he  cannot  claim  any  damages  for  the  non-fulfillment  of  the  con- 
tract."   Pages  467,  468. 

Lord  Blackburn  said:  "If  the  description  of  the  article  tendered 
is  different  in  any  respect,  it  is  not  the  article  bargained  for,  and  the 
other  party  is  not  bound  to  take  it.  I  think  in  this  case  what  the 
parties  bargained  for  was  rice,  shipped  at  Madras  or  the  coast  of 
I\Iadras.  Equally  good  rice  might  have  been  shipped  a  little  to  the 
north  or  a  little  to  the  south  of  the  coast  of  Madras.  I  do  not  quite 
know  what  the  boundary  is,  and  probably  equally  good  rice  might  have 
been  shipped  in  February  as  was  shipped  in  March,  or  equally  good 
rice  might  have  been  shipped  in  May  as  was  shipped  in  April,  and!  I 
dare  say  equally  good  rice  might  have  been  put  on.  board  another 
ship  as  that  which  was  put  on  board  the  Rajah  of  Cochin.  But  the 
parties  have  chosen,  for  reasons  best  known  to  themselves,  to  say: 
Wc  bargain  to  take  rice,  shipi)cd  in  this  i)articular  region,  at  that  par- 
ticular time,  on  board  that  particular  shi]);   and  before  the  defendants 


394 


DISCHARGE  OF  CONTRACT 


can  be  compelled  to  take  anything  in  fulfillment  of  that  contract  it 
must  be  shown  not  merely  that  it  is  equally  good,  but  that  it  is  the 
same  article  as  they  have  bargained!  for,  otherwise  they  are  not  bound 
to  take  it."    2  App.  Cas.  480,  481. 

Soon  after  that  decision  of  the  house  of  lords,  two  cases  were  de- 
termined in  the  court  of  appeal.  In  Reuter  v.  Sala,  4  C.  P.  Div.  239, 
under  a  contract  for  the  sale  of  "about  25  tons  (more  or  less)  black 
pepper,  October  and/or  November  shipment,  from  Penang  to  London, 
the  name  of  the  vessel  or  vessels,  marks,  and  full  particulars  to  be 
declared  to  the  buyer  in  writing  within  60  days  from  date  of  bill  of 
lading,"  the  seller,  within  the  60  days,  declared  25  tons  by  a  particular 
vessel,  of  which  only  20  tons  were  shipped  in  November,  and  five 
tons  in  December;  and  it  was  held  that  the  buyer  had  the  right  to 
refuse  to  receive  any  part  of  the  pepper.  In  Honck  v.  Muller,  7  O. 
B.  Div.  92,  under  a  contract  for  the  sale  of  2,000  tons  of  pig-iron  to 
be  delivered  to  the  buyer  free  on  board  at  the  maker's  wharf  "in 
November,  or  equally  over  November,  December,  and  January  next," 
the  buyer  failed  to  take  any  iron  in  November,  but  demanded  delivery 
of  one-third  in  December  and  one-third  in  January ;  and  it  was 
held  that  the  seller  was  justified  in  refusing  to  deliver,  and  in  giv- 
ing notice  to  the  buyer  that  he  considered  the  contract  as  canceled  by 
the  buyer's  not  taking  any  iron  in  November. 

The  plaintiff  in  the  case  at  bar  greatly  relied  on  the  very  recent  de- 
cision of  the  house  of  lords  in  Mersey  Co.  v.  Naylor,  9  App.  Cas.  434. 
affirming  the  judgment  of  the  court  of  appeal  in  9  Q.  B.  Div.  648,  and 
following  the  decision  of  the  court  of  common  pleas  in  Freeth  v. 
Burr;  L.  R.  9  C.  P.  208.  But  the  point  there  decided  was  that  the 
failure  of  the  buyer  to  pay  for  the  first  installment  of  the  goods  upon 
delivery  does  not,  unless  the  circumstances  evince  an  intention  on  his 
part  to  be  no  longer  bound  by  the  contract,  entitle  the  seller  to  re- 
scind the  contract,  and  to  decline  to  make  further  deliveries  under  it. 
And  the  grounds  of  the  decision,  as  stated  by  Lord  Chancellor  Sel- 
borne  in  moving  judgment  in  the  house  of  lords,  are  applicable  only 
to  the  case  of  a  failure  of  the  buyer  to  pay  for,  and  not  to  that  of  a 
failure  of  the  seller  to  deliver,  the  first  installment.  The  lord  chan- 
cellor said :  "The  contract  is  for  the  purchase  of  5,000  tons  of  steel 
blooms  of  the  company's  manufacture;  therefore,  it  is  one  contract 
for  the  purchase  of  that  quantity  of  steel  blooms.  No  doubt,  there  are 
subsidiary  terms  in  the  contract,  as  to  the  time  of  delivery, — 'delivery 
1,000  tons  monthly,  commencing  January  next,' — and  as  to  the  time 
of  payment, — 'payment  net  cash  within  three  days  after  receipt  of 
shipping  documents,' — but  that  does  not  split  up  the  contract  into  as 
many  contracts,  as  there  shall  be  deliveries  for  the  purpose  of  so 
many  distinct  quantities  of  iron.  It  is  quite  consistent  with  the  nat- 
ural meaning  of  the  contract  that  it  is  to  be  one  contract  for  the  pur- 
chase of  that  quantity  of  iron  to  be  delivered  at  those  times  and  in 
that  manner,  and  for  which  payment  is  so  to  be  made.     It  is  per- 


DISOHAEGE   OF   CONTRACT   BY   BREACH  395 

fectly  clear  that  no  particular  payment  can  be  a  condition  precedent 
of  the  entire  contract,  because  the  delivery  under  the  contract  was 
most  certainly  to  precede  payment;  and  that  being  so,  I  do  not  see 
how,  without  express  words,  it  can  possibly  be  made  a  condition  pre- 
cedent to  the  subsequent  fulfillment  of  the  unfulfilled  part  of  the  con- 
tract by  the  delivery  of  the  undelivered)  steel."    9  App.  Cas.  439. 

Moreover,  although  in  the  court  of  appeal  dicta  were  uttered  tend- 
ing to  approve  the  decision  in  Simpson  v.  Crippin,  and  to  disparage 
the  decisions  in  Hoare  v.  Rennie  and  Honck  v.  Muller,  above  cited,  yet 
in  the  house  of  lords  Simpson  v.  Crippin  was  not  even  referred  to, 
and  Lord  Blackburn,  who  had  given  the  leading  opinion  in  that  case, 
as  well  as  Lord  Bramwell,  who  had  delivered  the  leading  opinion  in 
Honck  v.  Muller,  distinguished  Hoare  v.  Rennie  and  Honck  v.  Muller 
from  the  case  in  judgment.    9  App.  Cas.  444,  446. 

Upon  a  review  of  the  English  decisions,  the  rule  laid  down  in  the 
earlier  cases  of  Hoare  v.  Rennie  and  Coddington  v.  Paleologo,  as 
well  as  in  the  later  cases  of  Reuter  v.  Sala  and  Honck  v.  Muller,  ap- 
pears to  us  to  be  supported  by  a  greater  weight  of  authority  than  the 
rule  stated  in  the  intermediate  cases  of  Simpson  v.  Crippin  and  Brandt 
V.  Lawrence,  and  to  accord  better  with  the  general  principles  affirmed 
by  the  house  of  lords  in  Bowes  v.  Shand,  while  it  in  no  wise  con- 
travenes the  decision  of  that  tribunal  in  Mersey  Co.  v.  Naylor. 

In  this  country  there  is  less  judicial  authority  upon  the  question. 
The  two  cases  most  nearly  in  point  that  have  come  to  our  notice  are 
Hill  V.  Blake,  97  N.  Y.  216,  which  accords  with  Bowes  v.  Shand,  and 
King  Philip  Mills  v.  Slater,  12  R.  L  82,  34  Am.  Rep.  603,  which  ap- 
proves and  follows  Hoare  v.  Rennie.  The  recent  cases  in  the  supreme 
court  of  Pennsylvania,  cited  at  the  bar,  support  no  other  conclusion. 
In  Shinn  v.  Bodine,  60  Pa.  182,  100  Am.  Dec.  560,  the  point  decided 
was  that  a  contract  for  the  purchase  of  800  tons  of  coal  at  a  certain 
price  per  ton,  "coal  to  be  delivered  on  board  vessels  as  sent  for  during 
the  months  of  August  and  September,"  was  an  entire  contract,  under 
which  nothing  was  payable  until  delivery  of  the  whole,  and  therefore 
the  seller  had  no  right  to  rescind  the  contract  upon  a  refusal  to  pay 
for  one  cargo  before  that  time.  In  Morgan  v.  McKee,  17  Pa.  228, 
and  in  Scott  v.  Kittanning  Coal  Co.,  89  Pa.  231,  33  Am.  Rep.  753,  the 
buyer's  right  to  rescind  the  whole  contract  upon  the  failure  of  the 
seller  to  deliver  one  installment  was  denied,  only  because  that  right 
had  been  waived,  in  the  one  case  by  unreasonable  delay  in  asserting  it, 
and  in  the  other  by  having  accepted,  paid  for,  and  usedl  a  previous 
installment  of  the  goods.  The  decision  of  the  supreme  judicial  court 
of  Massachusetts  in  Winchester  v.  Newton,  2  Allen,  492,  resembles 
that  of  the  house  of  lords  in  Mersey  Co.  v.  Naylor. 

Being  of  opinion  that  the  plaintifif's  failure  to  make  such  shipments 
in  February  and  March  as  the  contract  required  prevents  his  main- 
taining this  action,  it  is  needless  to  dwell  upon  the  further  objection 
that  the  shipments  in  April  did  not  comply  with  the  contract,  because 


4  <i.  '  ^ft-j    <^/^ 


y-yit/, 


pAjf^ 


•396  DISCHARGE  OP  CONTRACT 

the  defendants  could  not  te  compelled  to  take  about  1,000  tons  out 
of  the  larger  quantity  shipped  in  that  month,  and  the  plaintiff,  after 
once  designating  the  names  of  vessels,  as  the  contract  bound  him  to 
do,  could  not  substitute  other  vessels.  See  Busk  v.  Spence,  4  Camp. 
329;  Graves  v.  ^^g%,  9  Exch.  709;  Reuter  v.  Sala,  above  cited. 
Judgment  affirmed.        ^      ^ 


(B)  Conditional  Promises 
(a)  Concurrent  Conditions 


MORTON  V.  LAMB. 
(Court  of  King's  Bench,  1797.     7  Term  R.   125.) 

In  an  action  on  the  case  the  plaintiff  declared  against  the  defendant 
for  that  whereas  on  the  10th  Feb.  1796,  at  Manchester  in  the  county 
of  Lancaster,  in  consideration  that  the  plaintiff,  at  the  Special  instance 
and  request  of  the  defendant  had  then  and  there  bought  of  the  de- 
fendant 200  quarters  of  wheat  at  £5  Os.  6d.  per  quarter,  such  price  to 
be  therefore  paid  by  the  plaintiff  to  the  defendant,  he  the  defendant 
undertook  and  then  and  there  promised  the  plaintiff  to  deliver  the 
said  corn  to  him  (the  plaintiff)  at  Shardlow  in  the  county  of  Derby  in 
one  month  from  that  time,  viz.  of  the  sale;  and  then  he  alleged  that 
although  he  (the  plaintiff)  always  from  the  time  of  making  such  sale 
for  the  space  of  one  month  then  next  following  and)  afterwards  was 
ready  and  willing  to  receive  the  said  corn  at  Shardlow,  yet  the  de- 
fendant not  regarding  his  said  promise  &c.  did  not  in  one  month  from 
the  time  of  the  making  of  such  sale  as  aforesaid  or  at  any  other  time 
deliver  the  said  corn  to  the  plaintiff  at  Shardlow  or  elsewhere,  al- 
though he  (the  defendant)  was  often  requested  so  to  do,  &c.  The 
defendant  pleaded  the  general  issue ;  and  at  the  trial  the  plaintiff'  re- 
covered a  verdict. 

Mr.  Holroyd  obtained,  in  the  last  term,  a  rule  calling  on  the 
plaintiff  to  shew  cause  why  the  judgment  should  not  be  arrested,  be- 
cause it  was  not  averred  that  the  plaintiff  had  tendered  to  the  de- 
fendant the  price  of  the  corn,  or  was  ready  to  have  paid  for  it  on  de- 
livery.    *     *     * 

Lord  Ke;nyon,  Ch.  J.«  If  this  question  depended  on  the  technical 
niceties  of  pleading,  I  should  not  feel  so  much  confidence  as  I  do: 
but  it  depends  altogether  on  the  true  construction  of  this  agreement. 
The  defendant  agreed  with  the  plaintiff  for  a  certain  quantity  of  corn, 
to  be  delivered  at  Shardlow  within  a  certain  time ;   and  there  can  be 

«  Concurring  opinions  by  Grose  and  Lawrence,  JJ.,  are  omitted. 


DISCHABQE   Or   CONTRACT   BY    BREACH  397 

tio  doubt  but  that  the  parties  intended  that  the  payment  should  be 
made  at  the  time  of  the  delivery.  It  is  not  imputed  to  the  defendant 
that  he  didi  not  carry  the  corn  to  ShardTow,  but  that  he  did  not  deliver 
it  to  the  plaintiff:  to  this  declaration  the  defendant  objects,  and  says 
"I  did  not  deliver  the  corn  to  you  (the  plaintiff),  because  you  do  not 
say  that  you  were  ready  to  pay  for  it;  and  if  you  were  not  ready,  I 
am  not  bound  to  deliver  the  corn;"  and  the  question  is  whether  that 
should  or  should  not  have  been  alleged. 

The  case  decided  by  Lord  Holt,  in  Salk.  112,  if  indeed  so  plain  a 
case  wanted  that  authority  to  support  it,  shows  that  where  two  con- 
current acts  are  to  be  done,  the  party  wh6~sues"the  other  for  non- 
performance must  aver  that  he  had  performed)  or  was  ready  to  per- 
form, his  part  of  the  contract.  Then_th^e_plaindffjn_this  case  cannot 
impute  to  the  defendant  the  nondelivery  of  the  corn,  without  alleging 
that  he  waTl-eacly  to  pay  the  price  of  it.  A  plaintiff,  who  comes  into 
a  court  of  justice,  must  show  that  he  is  in  a  condition  to  maintain  his 
action.  But. it  has  been  argued  that  the  delivery  of  the  corn  was  a 
condition  precedent,  and  some  cases  have  been  cited  to  prove  it :  but 
they  do  not  appear  to  me  to  be  applicable.  In  the  one  in  Saunders 
(Saund.  350),  the  party  was  to  pull  down  a  wall,  and  was  then  to  be 
paid  for  it;  there  is  no  doubt  but  that  the  pulling  down  of  the  wall 
was  a  condition  precedent  to  the  payment;  the  act  was  to  be  done, 
and  then  the  price  was  to  be  paid  for  it.  So  in  the  case  in  Salk.  171, 
where  work  was  to  be  done,  and  then  the  workman  was  to  be  paid. 
And  in  ordinary  cases  of  this  kind  the  work  is  to  be  done  before  the 
wages  are  earned :  but  those  cases  do  not  apply  to  the  present,  where 
both  the  acts  are  to  be  done  at  the  same  time. 

Speaking  of  conditions  precedent  and  subsequent  in  other  cases 
only  leads  to  confusion.  In  the  case  of  Campbell  v.  Jones,  I  thought, 
and  still  continue  of  that  opinion,  that  whether  covenants  be  or  be 
not  independent  of  each  other  must  depend  on  the  good  sense  of  the 
case,  and  on  the  order  in  which  the  several  things  are  to  be  done: 
but  here  both  things,  the  delivery  of  the  corn  by  one,  and  the  payment 
by  the  other,  were  to  be  done  at  the  same  time;  and  as  the  plaintiff 
has  not  averred  that  he  was  ready  to  pay  for  the  corn,  he  cannot  main- 
tain this  action  against  the  defendant  for  not  delivering  it.  •  ♦  * 
Rule  absolute. 


398  DISCHARGE  OF  CONTKACT  t     Ar  t/'/ 

,  J                '                  (t^  ViTAi,  Conditions 
-i^  Axxu.MA4i^  iUy..-                  kf   if-f  fr-/  OmJ^  (^*^^! 

I-    '  luA  AA/rdO^A  K>i*xf-/.  ,    ,  ,  ^;)  ;=  '"' '-     -  "    '■■*<  ■  ■''  f^ 

K^  '^y^  ,fM  t^H^,    pnpE  et  al.  v.  ALLIS.  , 

(Supreme  Court  of  the  United  States,  1885.     115  U.  6.  363,  6  Sup.  Ct.  69, 

'.^iJjX9^     ^^  Error  to  the  Circuit  Court  of  tKe  United  States  for  the  East- 
j     ern  District  of  Wisconsin. 

Edfvvard  P.  Allis,  the  defendant  in  error,  was  the  plaintiff  in  the 
.circuit  court.  He  brought  his  suit  to  recover  from  the  defendants 
Thomas  J.  Pope  and  James  E.  Pope,  now  the  plaintiffs  in  error,  the 
,  sum  of  $17,840,  the  price  of  500  tons  of  pig-iron,  which  he  alleged 
he  had  bought  from  them  and  paid  for,  but  which  he  refused  to  ac- 
cept because  it  was  not  of  the  quality  which  the  defendants  had  agreed 
to  furnish.  The  plaintiff  also  demanded  $1,750  freight  on  the  iron, 
which  he  alleged  he  had  paid.  The  facts  appearing  upon  the  record 
were  as  follows :  The  plaintiff  carried  on  the  business  of  an  iron- 
founder  in  Milwaukee,  Wisconsin,  and  the  defendants  were  brokers 
in  iron  in  the  city  of  New  York.  In  the  month  of  January,  1880,  by 
correspondence  carried  on  by  mail  and  telegraph,  the  defendants 
agreed  to  sell  and  deliver  to  the  plaintiff  500  tons  of  No.  1  extra 
American  and  300  tons  No.  1  extra  Glengarnock  (Scotch)  pig-iron. 
The  American  iron  was  to  be  delivered  on  the  cars  at  the  furnace 
bank  at  Coplay,  Pennsylvania,  and  the  Scotch  at  the  yard  of  the  de- 
fendants in  New  York.  By  a  subsequent  correspondence  between  the 
plaintiff  and  the  defendants  it  fairly  appeared  that  the  latter  agreed 
to  ship  the  iron  for  the  plaintiff  at  Elizabethport,  New  Jersey.  It 
was  to  be  shipped  as  early  in  the  spring  as  cheap  freights  could  be 
had,  consigned  to  the  National  Exchange  Bank  at  Milwaukee,  which, 
in  behalf  of  the  plaintiff,  agreed  to  pay  for  the  iron  on  receipt  of  the 
bills  of  lading.  That  quantity  of  American  iron  was  landed  at  Mil- 
waukee and  delivered  to  the  plaintiff  about  July  15th.  Before  its  ar- 
rival at  Milwaukee  the  plaintiff  had  not  only  paid  for  the  iron,  but 
also  the  freight  from  Coplay  to  Milwaukee.  Soon  after  the  arrival  in 
Milwaukee  the  plaintiff  examined  the  500  tons  American  iron,  to 
which  solely  the  controversy  in  this  case  referred,  and  refused  to 
accept  it,  on  the  ground  that  it  was  not  of  the  grade  called)  for  by  the 
contract,  and  at  once  gave  the  defendants  notice  of  the  fact,  and  that 
he  held  the  iron  subject  to  their  order,  and  brought  this  suit  to  re- 
rover  the  price  of  the  iron  and  the  freight  thereon. 

The  defenses  relied  on  to  defeat  the  action  were  (1)  that  the  iron 
delivered  by  the  defendants  to  the  plaintiff  was  No.  1  extra  American 
iron,  and  was  of  the  kind  and  quality  required  by  the  contract;  and 
(2)  that  the  title  having  passed  to  the  plaintiff  when  the  iron  was 


DISCHARGE    OF   CONTRACT   BY    BREACH  399 

shipped  to  him  at  Elizabethport,  he  could  not  afterwards  rescind  the 
contract  and  sue  for  the  price  of  the  iron  and  the  freight  which  he 
had  paid,  but  must  sue  for  a  breach  of  the  warranty. 

It  was  conceded  upon  the  trial  that  if  the  plaintiff  was  entitled  to 
recover  at  all,  his  recovery  should  be  for  $22,315.40.  The  defend- 
ants pleaded  a  counterclaim  for  $5,311,  which  was  admitted  by  the 
plaintiff.  The  jury  returned  a  verdict  for  the  plaintiff  for  $16,513.11, 
for  which  sum  and  costs  the  court  rendered  a  judgment  against  the 
defendants.  This  writ  of  error  brings  that  judgment  under  review. 
Woods,  j.t  *  *  *  4.  The  assignment  of  error  mainly  relied 
on  by  the  plaintiffs  in  error  is  that  the  court  refused  to  instruct  the 
jury  to  return  a  verdict  for  the  defendants.  The  legal  proposition 
upon  which  their  counsel  based  this  request  was  that  the  purchaser 
of  personal  property,  upon  breach  of  warranty  of  quality,  cannot,  in 
the  absence  of  fraud,  rescind  the  contract  of  purchase  and  sale,  and 
sue  for  the  recovery  of  the  price.  And  they  contended  that,  as  the 
iron  was  delivered  to  defendant  in  error  either  at  Coplay  or  Eliza- 
bethport, and  the  sale  was  completed  thereby,  the  only  remedy  of  the 
defendant  in  error  was  by  a  suit  upon  the  warranty.  It  did  not  ap- 
pear that  at  the  date  of  the  contract  the  iron. had  been  manufactured, 
and  it  was  shown  by  the  record  that  no  particular  iron  was  segregated 
and  appropriated  to  the  contract  by  the  plaintiffs  in  error  until  a 
short  time  before  its  shipment,  in  the  latter  part  of  April  and  the  early 
part  of  May.  The  defendant  in  error  had  no  opportunity  to  inspect 
it  until  it  arrived  in  Milwaukee,  and  consequently  never  accepted  the 
particular  iron  appropriated  to  fill  the  contract.  It  was  established  by 
the  verdict  of  the  jury  that  the  iron  shipped  was  not  of  the  quality 
required  by  the  contract.  Under  these  circumstances  the  contention 
of  the  plaintiffs  in  error  is  that  the  defendant  in  error,  although  the 
iron  shipped  to  him  was  not  what  he  bought,  and  could  not  be  used 
in  business,  was  bound  to  keep  it,  and  could  only  recover  the  dif- 
ference in  value  between  the  iron  for  which  he  contracted  and  the 
iron  which  was  delivered  to  him. 

We  do  not  think  that  such  is  the  law.  When  the  subject-matter  of 
a  sale  is  not  in  existence,  or  not  ascertained  at  the  time  of  the  con- 
tract, an  undertaking  that  it  shall,  when  existing  or  ascertained,  pos- 
sess certain  qualities,  is  not  a  mere  warranty,  but  a  condition,  the 
performance  of  which  is  precedent  to  any  obligation  upon  the  Vendee 
under  the  contract;  because  the  existence  of  those  qualities  being 
part  of  the'  description  of  the  thing  sold  becomes  essential  to  its 
identity  and  the  vendee  cannot  be  obliged  to  receive  and  pay  for  a 
thing  different  from  that  for  which  he  contracted.  Chanter  v.  Hop- 
kins, 4  Mees.  &  W.  404;  Barr  v.  Gibson,  3  Mees.  &  W.  390;  Gom- 
perti  V.  Bartlett,  2  El.  &  Bl.  849;    Okcll  v.  Smith,   1  Stark,  N.  P. 

♦  A  portion  of  tlie  opinion  Is  omitted. 


4:00  DISCHARGE   OF   CONTRACT 

107;  notes  to  Cutter  v.  Powell,  2  Smith,  Lead.  Cas.  (7th  Amer.  Ed) 
Z7;  Woodle  v.  Whitney,  23  Wis.  55,  99  Am.  Dec.  102;  Boothby  v. 
Scales,  27  Wis.  626;  Fairfield  v.  Madison  Manuf'g  Co.,  38  Wis.  346. 
See,  also,  Nichol  v.  Godts,  10  Exch.  191.  So,  in  a  recent  case  de- 
cided by  this  court,  it  was  said  by  Mr.  Justice  Gray:  "A  statement" 
in  a  mercantile  contract  "descriptive  of  the  subject-matter  or  of  some 
material  incident,  such  as  the  time  or  place  of  shipment,  is  ordinarily 
to  be  regarded  as  a  warranty  in  the  sense  in  which  that  term  is 
used  in  insurance  and  maritime  law ;  Uiat  is  to  say,  a  condition  pre- 
cedent upon  the  failure  or  non-performance  of  which  the  party  ag- 
grieved may  repudiate  the  whole  contract."  Norrington  v.  Wright, 
115  U.  S.  188,  6  Sup.  Ct.  12,  29  L.  Ed.  366.  See,  also,  Filley  v.  Pope, 
115  U.  S.  213,  6  Sup.  Ct.  19,  29  L.  Ed.  372.  And  so,  when  a  con- 
tract for  the  sale  of  goods  is  made  by  sample,  it  amounts  to  an  un- 
dertaking on  the  part  of  the  seller  with  the  buyer  that  all  the  goods 
are  similar,  both  in  nature  and  quality,  to  those  exhibited,  and  if  they 
do  not  correspond  the  buyer  may  refuse  to  receive  them ;  or,  if  re- 
ceived, he  may  return  them  in  a  reasonable  time  allowed  for  exam- 
ination, and  thus  rescind  the  contract.  Lorymer  v.  Smith,  1  Barn. 
&  C.  1 ;   Magee  v.  Billingsley,  3  Ala.  679. 

The  authorities  cited  sustain  this  proposition:  that  when  a  vendor 
sells  goods  of  a  specified  quality,  but  not  in  existence  or  ascertained, 
and  undertakes  to  ship  them  to  a  distant  buyer,  when  made  or  ascer- 
tained, and  delivers  them  to  the  carrier  for  the  purchaser,  the  latter 
is  not  bound  to  accept  them  without  examination.  The  mere  delivery 
of  the  goods  by  the  vendor  to  the  carrier  does  not  necessaj^ily  bind 
the  vendee  to  accept  them.  On  their  arrival  he  has  the  right  to  in- 
spect them  to  ascertain  whether  they  conform  to  the  contract,  and 
the  right  to  inspect  implies  the  right  to  reject  them  if  they  are  not 
of  the  quality  required  by  the  contract.  The  rulings  of  the  circuit 
court  were  in  accordance  with  these  views. 

Wc  have  been  referred  by  the  plaintiffs  in  error  to  the  cases  of 
Thornton  v.  Wynn,  12  Wheat.  184,  6  L.  Ed.  595,  and  Lyon  v.  Ber- 
tram, 20  How.  149,  15  L.  Ed.  847,  to  sustain  the  proposition  that 
the  defendant  in  error  in  this  case  could  not  rescind  the  contract  and 
sue  to  recover  back  the  price  of  the  iron.  But  the  cases  are  not  in 
point.  In  the  first,  there  was  an  absolute  sale  with  warranty  and  de- 
livery to  the  vendee  of  a  specific  chattel,  namely,  a  race-horse;  in 
the  second,  the  sale  was  of  a  specified  and  designated  lot  of  flour 
which  the  vendee  had  accepted,  and  part  of  which  he  had  used,  with 
ample  means  to  ascertain  whether  or  not  it  conformed  to  the  contract. 

The  cases  we  have  cited  are  conclusive  against  the  contention  of 
the  plaintiffs  in  error.  The  jury  has  found  that  the  iron  was  not  of 
the  quality  which  the  contract  required,  and  on  that  ground  the  de- 
fendant in  error,  at  the  first  opportunity,  rejected  it,  as  he  had  a  right 
to  do.    His  suit  to  recover  the  price  was,  therefore,  well  brought. 


DISCHARGE    OF   CONTRACT    BY    BREACH  401 

Other  errors  are  assigned,  but,  in  our  opinion,  they  present  no 
ground  for  the  reversal  of  the  judgment,  and  do  not  require  discus- 
sion.    Judgment  affirmed. 


(c)  Wabbantiks 


■  y 
BRYANT  V.  ISBilRGH. 

(Supreme    Judicial    Court    of    Massachusetts,    1859,      13    Gray,    607, 
74  Am.  Dec.  655,) 

Action  of  contract  to  recover  the  price  of  a  horse  sold  and  delivered 
to  the  defendant  by  the  plaintiff.  Answer,  that  the  plaintiff  warrant- 
ed the  horse  to  be  sound  at  the  time  of  the  sale;  that  the  horse 
proved  to  be  unsound,  and  was  returned  to  the  plaintiff.  The  plaintiff 
did  not  receive  the  horse  back,  but  declined  to  do  so.  Verdict  for 
plaintiff,  with  deduction  for  damages. 

The  court  ch argued  that  the  defendant  had  no  right  to  return  the 
horse  and  rescind  the  contract,  in  the  absence  of  fraud,  unless  such 
aTemedy  was  provided  for  by  the  terms  of  the  contract.  Defendant 
excepted  to  this  charge,® 

METCALf,  J,  The  precise  question  in  this  ca-^e  is,  whether  a  pur- 
chaser of  personal  property,  sold  to  him  with  an  express  warranty, 
and  taken  into  possession  by  him,  can  rescind  the  contract  and  return 
the  property,  for  breach  of  the  warranty,  when  there  is  no  fraud, 
and  no  express  agreement  that  he  may  do  so.  It  appears  from  the 
cases  cited  for  the  plaintiff  that  in  the  English  Courts,  and  in  some 
of  the  courts  in  this  country,  he  cannot,  and  that  his  only  remedy  is 
on  the  warranty.  See,  also,  2  Steph.  N.  P.  1296;  Addison  on  Cont. 
(2d  Am,  Ed.)  272;  Oliphant's  Law  of  Horses,  88;  Cripp?  v.  Smith, 
3  Irish  Law  R.  277. 

But  we  are  of  oi:(inion  (notwithstanding  a  dictum  of  Parsons,  C,  J., 
in  Kimball  v,  Cunningham,  4  Mass.  505,  3  Am.  Dec.  230)  that,  by 
the  law  of  this  commonwealth,  as  understood  and  practiced  upon  for 
more  than  forty  years,  there  is  no  such  difference  between  the  effect 
of  an  implied  and  an  express  warranty  as  deprives  a  purchaser  of 
any  legal  right  of  rescission  under  the  latter  which  he  has  under  the 
former;  and  that  he  to  whom  property  is  sold  with  express  wananty, 
as  well  as  he  to  whom  it  is  sold  with  implied  warranty,  maj*  rescind 
the  contract  for  breach  of  warranty,  by  a  seasonable  return  of  the 
property,  and  thus  entitle  himself  to  a  full  defense  to  a  suit  brought 
against  him  for  the  price  of  the  property,  or  to  an  action  agaiust  Uie 

•  The  statement  of  facts  Is  abrldgod, 

TlIROCKM.CONT. — 26 


402  DISCHARGE  OF  CONTRACT 

seller  to  recover  back  the  price,  if  it  has  been  paid  to  him.  In  Brad- 
ford V.  Manly,  13  Mass.  139,  7  Am.  Dec.  122,  where  it  was  decided 
that  a  sale  by  sample  was  tantamount  to  an  express  warranty  that 
the  sample  was  a  true  representative  of  the  kind  of  thing  sold  (and 
in  which  case  there  was  no  fraud).  Chief  Justice  Parker  said:  "If 
a  different  thing  is  delivered,  he"  (the  seller)  "does  not  perform  his 
contract,  and  must  pay  the  difference,  or  receive  the  thing  back  and 
rescind  the  bargain,  if  it  is  oft'ered  him."  This,  it  is  true,  was  only 
a  dictum,  and  not  to  be  regarded  as  a  decisive  authority.  But  in  Per- 
ley  V.  Balch,  23  Pick.  283,  34  Am.  Dec.  56,  which  was  an  action  on 
a  promissory  note  given  for  the  price  of  an  ox  sold  to  the  defendant, 
it  was  adjudged  that  the  jury  were  rightly  instructed  that  if,  on  the 
sale  of  the  ox,  there  was  fraud,  or  an  express  warranty  and  a  breach 
of  it,  the  defendant  might  avoid  the  contract  by  returning  the  ox  with- 
in a  reasonable  time,  and  that  this  would  be  a  defense  to  the  action. 
In  Dorr  v.  Fisher,  1  Cush.  274,  it  was  said  by  Shaw,  C.  J.,  that  "to 
avoid  circuity  of  action,  a  warranty  may  be  treated  as  a  condition 
subsequent,  at  the  election  of  the  vendee,  who  may,  upon  a  breach 
thereof,  rescind  the  contract  and  recover  back  the  amount  of  his  pur- 
chase money,  as  in  case  of  fraud.  But  if  he  does  this,  he  must  first 
return  the  property  sold,  or  do  everything  in  his  power  requisite  to 
a  complete  restoration  of  the  property  to  the  vendor;  and  without 
this  he  cannot  recover."  The  chief  justice  took  no  distinction  be- 
tween an  express  warranty  and  an  implied  one,  but  referred,  in 
support  of  what  he  had  said  (with  other  cases),  to  Perley  v.  Balch, 
cited  above. 

In  1816,  when  the  case  of  Bradford  v.  Manly  was  before  this  court, 
and  afterwards,  until  1831,  the  law  of  England,  on  the  point  raised 
in  the  present  case,  was  supposed  to  be, as  we  now  hold  it  to  be  here. 
Lord  Eldon  had  said,  in  Curtis  v.  Hannay  (3  Esp.  R.  82),  that  he  took 
it  to  be  "clear  law ;"  and  so  it  was  laid  down  in  2  Selw.  N.  P.  (1st. 
Ed.)  586,  in  1807,  and  in  Long  on  Sales,  125,  126,  in  1821,  and  in 
2  Stark.  Ev.  (1st  Ed.)  645,  in  1825.  In  1831,  in  Street  v.  Blay  (2  B. 
&  Ad.  461),  Lord  Eldon's  opinion  was  first  denied,  and  a  contrary 
opinion  expressed  by  the  court  of  the  king's  bench.  Yet  our  court 
subsequently  (in  1839)  decided  the  case  of  Perley  v.  Balch.  The 
doctrine  of  that  decision  prevents  circuity  of  action  and  multiplicity 
of  suits,  and  at  the  same  time  accomplishes  all  the  ends  of  justice. 
Exceptions  sustained 


ISAACS  v.  WANAMAKER. 

(Supreme  Court  of  New  York.  1911.     71  Misc.  Rep.  55,  127  N.  Y.  Supp.  346.) 

Action  by  David  Isaacs  against  John  Wanamaker.     There  was  a 
iudgment  for  plaintiff,  and  defendant  moves  for  a  new  trial. 

Pound,  J.     It  seems  to  be  the  law  of  New  York  and  of  this  case 


DISCHARGE   OF   CONTRACT  BY   BREACH  403 


that  a  buyer  who  has  bought  with  a  warranty  may  not  return  his  pur- 
chase and  rescind  the  sale  upon  warranty  broken.  While  the  question 
has.  in  a  way,  been  kept  open  by  the  Court  of  Appeals  (Kupfer  Co. 
V.  Pellman,  67  Misc.  Rep.  149,  151,  121  N.  Y.  Supp.  1081),  the  rule 
has  often  been  so  stated,  and  I  fail  to  see  any  other  theory  on  which 
the  judgment  herein  was  reversed  in  that  court.  Brigg  v.  Hilton,  99 
N.  Y.  517,  3  N.  E.  51,  52  Am.  Rep.  63;  Fairbank  Canning  Co.  v. 
Metzger,  118  N.  Y.  260.  269,  23  N.  E.  372,  16  Am.  St.  Rep.  753; 
Isaacs  V.  Wanamaker,  189  N.  Y.  122,  81  N.  E.  763.  While  in  many 
other  jurisdictions  a  buyer  who  has  bought  with  a  warranty  may  re- 
scind the  sale  upon  warranty  broken,  and  the  proposed  uniform  sale 
of  goods  act  gives  this  remedy.  Williston  on  Sales,  §§  603,  608. 
Where  the  thing  bought,  when  delivered,  is  perfectly  worthless,  the 
buyer  may  tender  it  back  and  recover  the  purchase  money.  Stone 
V.  Frost,  61  N.  Y.  614.  And  if  there  is  a  contract  to  sell,  instead  of  a 
bargain  and  sale,  and  a  delivery  pursuant  to  the  contract,  the  buyer 
may  reject  for  breach  of  warranty  and  recover  back  the  purchase 
price.  Voorhees  v.  Earl,  2  Hill,  288,  291,  38  Am.  Dec.  588.  But 
even  if  the  proofs  in  this  case  tended  to  show  an  executory  contract 
to  sell  and  deliver  an  automobile  to  be  put  into  good  repair  and  good 
running  condition — which  is  doubtful — the  complaint  alleges  an  ex- 
ecuted sale  with  warranties  and  representations  as  to  the  present  con- 
dition of  the  automobile. 

With  the  distinction  above  indicated  in  mind,  there  would  be  fatal 
variance  between  pleadings  and  proof,  if  the  case  were  submitted  on 
the  theory  of  an  executory  sale.  The  case  was  submitted  to  the  jury 
on  the  theory  of  failure  of  consideration,  and  they  found  for  the 
plaintiff.  Thejvei^ht  of  evidence  is  with  the  defendant  that  there 
was  no  such  total  failure  of  consideration  as  to  deprive  him  of  the 
right  to  litigate  damages.  In  Alsing  Co.  v.  New  England  Quartz  Co., 
66  App.  Div.  473,  7Z  N.  Y.  Supp.  347,  affirmed  174  N.  Y.  536,  66 
N.  E.  1110,  cited  by  plaintiff,  the  question  of  damages  for  breach  of 
express  warranty  was  litigated,  and  evidence  was  given  that  the  ma- 
chine was  "useless  and  could  not  be  set  right  by  any  system  of  re- 
pairs." No  such  evidence  was  before  the  jury  in  this  case,  and  the 
weight  of  evidence  was  that  the  automobile  in  suit  could  be  set  as 
right  as  it  was  when  plaintiff  bought  it  for  no  large  amount,  and  then, 
while  it  would  not,  perhaps,  be  w^orth  the  purchase  price,  $1,200,  it 
would  have  a  substantial  value  as  an  automobile  of  the  period  of  1904. 

Motion  for  new  trial  must  be  granted  upon  defendant's  exceptions 
and  on  the  ground  that  the  verdict  was  contrary  to  the  evidence  and 
contrary  to  the  law.    Costs  to  abide  the  event.    So  ordered. 


404  DISCHARGE  OF  CONTRACT 


IV.  Discharge  by  Impossibility  of  Performance  • 


See,  also,  Appeal  of  Billings,  supra,  p.  330. 


ANDERSON  v.  MAY  et  al. 

(Supreme  Court  of  Minnesota,  1892.    50  Minn.  280,  52  N.  W.  530,  17  L.  R.  A. 
555,  36  Am.  St.  Rep.  642.) 

Action  by  G.  W.  Anderson  against  L.  L.  May  &  Co.  on  a  certain 
contract.    From  a  judgment  for  plaintiff,  defendant  appeals. 

GiLFiLLAN,  C.  J.  The  defendant  having  alleged  as  a  counterclaim 
a  contract  in  June,'  1890,  between  him  and  plaintiff,  whereby  the  lat- 
ter agreed  to  sell  and  deliver  to  the  former,  on  or  before  Nover^iber 
15th,  certain  quantities  of  specified  kinds  of  beans,  and  that  he 
failed  so  to  do  except  as  to  a  part  thereof,  the  plaintiff,  in  his  reply, 
alleged  in  substance  that  the  contract  was  to  deliver  the  beans  from 
the  crop  that  he  should  raise  that  year  from  his  market  gardening 
farm  near  Red  Wing. 

Upon  the  trial  the  contract  was  proved  by  letters  passing  between 
the  parties.  From  these  it  fairly  appears  that  the  beans  to  be  deliv- 
ered were  to  be  grown  by  plaintiff,  though  it  cannot  be  gathered  from 
them  that  he  was  to  grow  the  beans  on  any  particular  land.  They 
contain  no  restriction  in  that  respect.  There  can  be  no  question  that, 
if  grown  by  him,  and  of  the  kinds  and  quality  specified,  defendant 
would  have  been  obliged  to  accept  the  beans,  though  not  grown  on 
any  land  previously  cultivated  by  plaintiff.  The  contract,  therefore, 
was,  in  effect,  to  raise  and  sell  and  deliver  the  quantities,  kinds,  and 
quality  of  beans  specified, — a  contract  in  its  nature  possible  of  per- 
formance. As  an  excuse  for  not  delivering  the  entire  quantity  con- 
tracted for,  the  plaintiff  relies  on  proof  of  the  fact  that  an  early  un- 
expected frost  destroyed  or  injured  his  crop  to  such  extent  that  he 
was  unable  to  deliver  the  entire  quantity. 

What,  in  the  way  of  subsequently  arising  impossibility  for  the 
party  to  perform,  will  suffice  as  excuse  for  non-performance  of  a  con- 
tract, is  well  settled  in  the  decisions;  the  only  apparent  difference  in 
them  arising  from  the  application  of  the  rules  to  particular  circum- 
stances. The  general  rule  is  as  well  stated  as  anywhere  in  2  Chit. 
Cont.  1074,  thus :  "Where  the  contract  is  to  do  a  thing  which  is  pos- 
sible in  itself,  or  where  it  is  conditioned  on  any  event  which  happens, 
the  promisor  will  be  liable  for  a  breach  thereof,  notwithstanding  it 
was  beyond  his  power  to  perform  it;   for  it  was  his  own  fault  to  run 

9  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §  250. 


DISCHARGE    BY    IMPOSSIBILITY    OF   PERFORMANCE  405 

the  risk  of  undertaking  to  perform  an  impossibility,  when  he  might 
have  provided  against  it  by  his  contract.  And  therefore,  in  such 
cases,  the  performance  is  not  excused  by  the  occurrence  by  an  inevi- 
table accident,  or  other  contingency,  although  it  was  not  foreseen  by, 
or  within  the  control  of,  the  party."  An  application  of  this  rule  is 
furnished  by  Cowley  v,  Davidson,  13  Minn.  92,  (Gil.  86.) 

What  is  sometimes  called  an  "exception  to  the  rule"  is  where  the 
contract  is  implied  to  be  made  on  the  assumed  continued  existence  of 
a  particular  person  or  thing,  and  the  person  or  thing  ceases  to  exist, 
as,  where  it  is  for  personal  service,  and  the  person  dies,  or  it  is  for 
repairs  upon  a  particular  ship  or  building,  and  the  ship  or  building  is 
destroyed.  An  agreement  to  sell  and  deliver  at  a  future  time  a  spe- 
cific chattel  existing  when  the  agreement  is  made  would  come  under 
this  exception.  The  exception  was  extended  further  than  in  any 
other  case  we  have  found  in  Howell  v.  Coupland,  L.  R.  9  Q.  B.  462. 
That  was  a  contract  to  sell  and  deliver  a  certain  quantity  from  a  crop 
to  be  raised  on  a  particular  piece  of  land,  and  the  entire  crop  was 
destroyed  by  blight.  The  court  held  the  contract  to  be  to  deliver 
part  of  a  specific  thing,  to  wit,  of  the  crop  to  be  grown  on  a  given 
piece  of  land,  and  held  it  to  come  within  the  rule  that,  where  the 
obligation  depends  on  the  assumed  existence  of  a  specific  thing,  per- 
formance is  excused  by  the  destruction  of  the  thing  without  the  par- 
ties' fault.  Without  intimating  whether  we  would  follow  that  decision 
in  a  similar  case,  we  will  say  that  the  case  is  unlike  this,  in  that  in 
this  case  the  plaintiff  was  not  limited  or  restricted  to  any  particular 
land.  It  was  not  an  undertaking  to  sell  and  deliver  part  of  a  specific 
crop,  but  a  general  undertaking  to  raise,  sell,  and  deliver  the  specified 
quantity  of  beans. 

We  have  been  cited  to  and  found  no  case  holding  that,  where  one 
agrees  generally  to  produce,  by  manufacture  or  otherwise,  a  particu- 
lar thing,  performance  being  possible  in  the  nature  of  things,  he  may 
be  excused  from  performance  by  the  destruction,  before  completion 
or  delivery,  of  the  thing,  from  whatever  cause,  except  the  act  of  the 
other  party.  Applications  of  the  general  rule,  where  the  thing  agreed 
to  be  produced  was,  before  completion,  destroyed  without  the  party's 
fault,  are  furnished  in  Adams  v.  Nichols,  19  Pick.  (Mass.)  275,  279, 
31  Am.  Dec.  137;  School  Dist.  v.  Dauchy,  25  Conn.  530,  68  Am.  Dec. 
371;  and  Trustees  v.  Bennett,  27  N.  J.  Law,  513,  72  Am.  Dec.  2>7Z, 
approved  and  followed  in  Stees  v.  Leonard,  20  Minn.  494,  (Gil.  448.) 
Where  such  causes  may  intervene  to  prevent  a  party  performing,  he 
should  guard  against  them  in  his  contract.     Order  reversed. 


406  DISCHARGE  OF   CONTRACT 

V.  Discharge  by  Operation  of  Law  *• 
1.  Merger 


CLIFTON  V.  JACKSON  IRON  CO. 

(Supreme  Court  of  Michigan,  18S9.     74  Mich.  183,  41  N.  W.  891,  16 
Am.  St.   Rep.  621.) 

Trespass  by  Charles  CHfton  against  the  Jackson  Iron  Company  for 
cutting  timber  from  plaintiff's  land.  Judgment  for  plaintiff,  and  de- 
fendant brings  error. 

Campbell,  J.  Plaintiff  sued  defendant  for  trespass  in  cutting  his 
timber  in  the  winter  of  1885-86.  The  defense  set  up  was  that  the  tim- 
ber, though  on  plaintiff's  land,  belonged  to  defendant.  This  claim  was 
based  on  the  fact  that  on  September  22,  1877,  a  little  more  than  eight 
years  before  the  trespass,  defendant  made  a  contract  to  sell  the  land 
trespassed  on  to  plaintiff",  but  with  this  reservation:  "Reserving  to 
itself,  its  assigns  and  corporate  successors,  the  ownership  of  pine,  but- 
ternut, hemlock,  beech,  maple,  birch,  iron-wood,  or  other  timber  suit- 
able for  sawing  into  lumber,  or  for  making  into  firewood  or  charcoal, 
now  on  said  tract  of  land,  and  also  the  right  to  cut  and  remove  any  or 
all  of  said  timber,  at  its  option,  at  any  time  within  ten  years  from 
and  after  the  date  of  these  presents."  There  were  some  unimpor- 
tant provisions,  also,  not  now  material. 

Plaintiff  showed  that  on  November  4,  1885,  the  defendant  conveyed 
to  him  the  land  in  question  by  full  warranty  deed,  and  with  no  excep- 
tions or  reservations  whatever.  The  testimony  of  defendant's  agent, 
who  cut  the  timber,  tended  to  prove  that  when  the  cutting  was  done 
the  defendant's  manager  did  not  dispute  plaintift''s  title,  but  gave  the 
agent  to  understand  that  it  belonged  to  plaintiff,  but  that  some  arrange- 
ment would  be  made  about  it ;  that  plaintiff  was  then  absent,  and  there 
was  no  conversation  with  him  or  his  wife  on  the  subject.  The  bill  of 
exceptions  certifies  that  no  other  evidence  was  given  concerning  the 
right  to  cut  timber.  Upon  these  facts  the  court  held  that  the  deed 
conveyed  the  right  in  the  timber  to  plaintiff,  and  that  he  owned  it. 

Had  no  deed  been  made,  it  is  agreed  that  the  reservation  would 
have  prevailed.  But  a  previous  contract  cannot  contradict  or  control 
the  operation  of  a  deed.  It  was  competent  for  defendant  to  relmquish 
any  contract  reservation,  and  a  deed  which  grants  and  warrants 
without  any  reservation  has  that  eft"ect.  We  do  not  hold  that  if  the 
deed  were  so  made  by  some  mistake  within  the  cognizance  of  equity 
the  mistake  might  not  be  corrected.    Neither  need  we  consider  wheth- 

10  For  discussiou  of  principles,  see  Clark  on  Contracts  (2d  Ed),  §§  252,  253. 


DISCHARGE    BY    OPEKATION    OF   LAW  407 

er,  after  such  a  deed,  there  might  not  be  such  dealings  as  to  render 
such  timber-cutting  lawful,  by  license,  express  or  implied.     In  this 
case  there  was  no  testimony  tending  to  show  that  the  deed  was  not 
supposed  and  intended  to  close  up  all  the  rights  of  the  parties. 
The  judgment  must  be  affirmed.    The  other  justices  concurred. 


2.  Alteration  of  a  Written  Instrument 


WOOD  V.  STEELE. 

(Supreme  Court  of  the  United  States,  1867.  6  Wall.  80,  18  L.  Ed.  725.) 
Mr.  Justice  Swayne  delivered  the  opinion  of  the  court. 
The  action  was  brought  by  the  plaintiff  in  error  upon  a  promissory 
note,  made  by  Steele  and  Newson,  bearing  date  October  11th,  1858, 
for  $3720,  payable  to  their  own  order  one  year  from  date,  with  in- 
terest at  the  rate  of  two  per  cent,  per  month,  and  indorsed  by  them 
to  Wood,  the  plaintiff. 

Upon  the  trial  it  appeared  that  Newson  applied  to  Allis,  the  agent 
of  Wood,  for  a  loan  of  money  upon  the  note  of  himself  and  Steele. 
Wood  assented,  and  Newson  was  to  procure  the  note.  Wood  left 
the  money  with  Allis  to  be  paid  over  when  the  note  was  produced. 
The  note  was  afterwards  delivered  by  Newson,  and  the  money  paid 
to  him.  Steele  received  no  part  of  it.  At  that  time,  it  appeared  on 
the  face  of  the  note,  that  "September"  had  been  stricken  out  and  "Oc- 
tober 11th"  substituted  as  the  date.  This  was  done  after  Steele  had 
signed  the  note,  and  without  his  knowledge  or  consent.  These  circum- 
stances were  unknown  to  Wood  and  to  Allis.  Steele  was  the  surety 
of  Newson.  It  does  not  appear  that  there  was  any  controversy  about 
the  facts.  The  argument  being  closed,  the  court  instructed  the  jury, 
"that  if  the  said  alteration  was  made  after  the  note  was  signed  by  the 
defendant,  Steele,  and  by  him  delivered  to  the  other  maker,  Nevyson, 
Steele  was  discharged  from  all  liability  on  said  note."  The  plaintiff 
excepted.  The  jury  found  for  the  defendant,  and  the  plaintiff  prose- 
cuted this  writ  of  error  to  reverse  the  judgment. 

Instructions  were  asked  by  the  plaintiff's  counsel,  which  were  re- 
fused by  the  court.  One  was  given  with  a  modification.  Exceptions 
were  duly  taken,  but  it  is  deemed  unnecessary  particularly  to  advert 
to  them.  The  views  of  the  court  as  expressed  to  the  jury,  covered 
the  entire  ground  of  the  controversy  between  the  parties. 

The  state  of  the  case,  as  presented,  relieves  us  from  the  necessity 
of  considering  the  questions,— upon  whom  rested  the  burden  of  proof, 
the  nature  of  the  presumption  arising  from  the  alteration  apparent  on 
the  face  of  the  paper,  and  whether  the  insertion  of  a.  day  in  a  blank 
left  after  the  month,  exonerates  the  maker  who  has  not  assented  to  it. 


408  DISCHARGE   OF  CONTRACT 

Was  the  instruction  given  correct? 

It  was  a  rule  of  the  common  law  as  far  back  as  the  reign  of  Ed- 
ward III,  that  a  rasure  in  a  deed  avoids  it.  The  effect  of  alterations 
in  deeds  was  considered  in  Pigot's  Case,  11  Coke,  27,  and  most  of 
the  authorities  upon  the  subject  down  to  that  time  were  referred  to. 
[n  Master  v.  Aliller,  4  Term  R.  320,  1  Smith,  Lead.  Cas.  1141,  the 
subject  was  elaborately  examined  with  reference  to  commercial  pa- 
per. It  was  held  that  the  established  rules  apply  to  that  class  of  se- 
curities as  well  as  to  deeds.  It  is  now  settled,  in  both  English  and 
American  jurisprudence,  that  a  material  alteration  in  any  commercial 
paper,  without  the  consent  of  the  party  sought  to  be  charged,  ex- 
tinguishes his  liability.  The  materiality  of  the  alteration  is  to  be  de- 
cided by  the  court.  The  question  of  fact  is  for  the  jury.  The  alter- 
ation of  the  date,  whether  it  hasten  or  delay  the  time  of  payment,  has 
been  uniformly  held  to  be  material.  The  fact  in  this  case  that  the  al- 
teration was  made  before  the  note  passed  from  the  hands  of  Newson, 
cannot  affect  the  result.     He  had  no  authority  to  change  the  date. 

The  grounds  of  the  discharge  in  such  cases  are  obvious.  The  agree- 
ment is  no  longer  the  one  into  which  the  defendant  entered.  Its 
identity  is  changed ;  another  is  substituted  without  his  consent ;  and 
by  a  party  who  had  no  authority  to  consent  for  him.  There  is  no 
longer  the  necessary  concurrence  of  minds.  If  the  instrument  be 
under  seal,  he  may  well  plead  that  it  is  not  his  deed ;  and  if  it  be  not 
under  seal,  that  he  did  not  so  promise.  In  either  case,  the  issue  must 
necessarily  be  found  for  him.  To  prevent  and  punish  such  tampering, 
the  law  does  not  permit  the  plaintiff  to  fall  back  upon  the  contract  as 
it  was  originally.  In  pursuance  of  a  stern  but  wise  policy,  it  annuls 
the  instrument,  as  to  the  party  sought  to  be  wronged. 

The  rules,  that  where  one  of  two  innocent  persons  must  suffer,  he 
who  has  put  it  in  the  power  of  another  to  do  the  wrong,  must  bear 
the  loss,  and  that  the  holder  of  commercial  paper  taken  in  good  faith 
and  in  the  ordinary  course  of  business,  is  unaft"ected  by  any  latent  in- 
firmities of  the  security,  have  no  application  in  this  class  of  cases. 
The  defendant  could  no  more  have  prevented  the  alteration  than  he 
could  have  prevented  a  complete  fabrication ;  and  he  had  as  little  rea- 
son to  anticipate  one  as  the  other.  The  law  regards  the  security,  after 
it  is  altered,  as  an  entire  forgery  with  respect  to  the  parties  who  have 
not  consented,  and  so  far  as  they  are  concerned,  deals  with  it  ac- 
cordingly. 

The  instruction  was  correct  and  the  judgment  is  afifirmed.** 

11  By  the  Uniform  Negotiable  Instruments  Law,  §  124,  it  Is  provided: 
"Where  a  negotiable  instrument  is  materially  altered  without  the  assent 
of  all  parties  liable  thereon,  it  is  avoided,  except  as  against  a  party  who 
has  himself  made,  authorized  or  assented  to  the  alteration,  and  subsequent 
indorsers. 

"But  when  an  instrument  has  been  materially  altered  and  is  in  the  hands 
of  a  holder  in  due  course,  not  a  party  to  the  alteration,  he  may  enforce 
payment  thereof  according  to  its  original  tenor." 


REMEDIES    ON    BE  EACH    OF   CONTRACT  409 

VI.  Remedies  on  Breach  of  Contract** 
1.  Damages 


UNITED  STATES  v.  BEHAN. 

(Supreme  Court  of  the  United  States.  1SS4.    110  U.  S.  338,  4  Sup.  Ct.  81, 

28  L.  Ed.  168.) 

Bradley,  J.  Behan,  the  appellee  and  claimant,  filed  a  petition  in 
the  court  below,  setting  forth  that  on  the  twenty-sixth  of  December, 
1879,  one  John  Roy  entered  into  a  contract  with  C.  W.  Howell,  major 
of  engineers  of  the  United  States  army,  to  make  certain  improve- 
ments in  the  harbor  of  New  Orleans,  (describing  the  same,)  and  that 
the  claimant  and  two  other  persons  named  became  bondsmen  for  the 
faithful  performance  of  the  work;  that  on  February  10,  1881,  the 
contract  with  Roy  was  annulled  by  the  engineer  office,  and  the  bonds- 
men were  notified  that  they  had  a  right  to  continue  the  work  under 
the  contract  if  they  desired  to  do  so,  and  that  the  claimant  complied 
with  this  suggestion  and  undertook  the  work;  that  he  went  to  great 
expense  in  providing  the  requisite  machinery,  materials,  and  labor 
for  fulfilling  the  contract,  but  that  in  September,  1881,  it  being  found, 
by  the  report  of  a  board  of  engineers,  that  the  plan  of  improvement 
was  a  failure,  without  any  fault  of  the  claimant,  the  work  was  ordered 
to  cease;  that  thereupon  the  claimant  stopped  all  operations,  and  dis- 
posed of  the  machinery  and  materials  on  hand  upon  the  best  terms 
possible,  and  sent  to  the  war  department  an  account  of  his  outlay  and 
expenses,  and  the  value  of  his  own  time,  claiming  as  due  to  him,  after 
all  just  credits  and  ofifsets,  the  sum  of  $36,347.94,  for  which  sum  he 
prayed  judgment.  The  claimant  afterwards  filed  an  amended  petition, 
in  which  the  various  transactions  and  his  operations  under  the  con- 
tract were  set  forth  in  greater  detail,  showing,  among  other  things, 
that  the  amount  of  his  expenses  for  machinery  and  tools,  for  mate- 
rials, and  for  labor  and  operations  carried  on,  after  deducting  the 
proceeds  realized  from  the  sale  of  the  plant  remaining  when  the  work 
was  suspended,  amounted  to  the  sum  of  $33,192.90.  The  petition 
further  alleged  that  the  claimant  could  have  completed  the  work  con- 
templated by  the  contract  by  a  further  expense  of  $10,000,  and  that 
the  amount  which  would  then  have  been  due  therefor  would  have  been 
$52,000,  leaving  a  profit  to  him  of  $8,807.10. 

The  petition  concluded  as  follows :  "Your  petitioner  therefore  re- 
spectfully shows  that  his  reasonable  and  necessary  expenditures  up- 

1 2  For  discussion  of  principles,  see  Clark  on  Contracts  (2d  Ed.)  §§  25G. 
2n7.  2G0,  202,  2G4,  205. 


4:10  DISCHARGE  OF  CONTRACT 

on  the  work  above  described  amounted  to  $33,195.92,  which  sum  rep- 
resents the  losses  actually  sustained  by  petitioner  by  reason  of  the 
defendants'  breach  of  the  contract.  And  petitioner  further  sets  forth 
that  the  reasonable  and  legitimate  profits  which  he  might  have  ob- 
tained but  for  the  said  breach  of  contract  may  be  properly  computed 
at  $8,807.10,  assuming  $52,000  as  the  amount  to  be  paid  for  the  com- 
pleted work.  And  petitioner  further  shows  that  he  has  not  received 
one  dollar  from  the  defendants  on  account  of  said  work,  but  that  his 
claim  and  accompanying  accounts,  pre'sented  to  the  engineer  depart- 
ment, have  been  transmitted  to  this  court  by  the  secretary  of  war. 
Your  petitioner  therefore  alleges  that  he  is  entitled  to  receive  from 
the  United  States  the  sum  of  forty-two  thousand  dollars  ($42,000) 
over  and  above  all  just  credits  and  offsets.  Wherefore  he  prays 
judgment  for  that  amount." 

The  court  of  claims  found  the  material  facts  to  be  substantially  as 
stated  in  the  petition.  The  contract  of  Roy  is  set  forth  in  full  in  the 
findings,  from  which  it  appears  that  the  contracting  party  was  re- 
quired to  furnish  and  lay  down  an  artificial  covering  of  cane-mats 
over  the  sloping  portion  of  the  riverbed  of  the  Mississippi  in  front  of 
the  third  district  of  New  Orleans,  to  extend  outwards  to  a  depth  in 
the  river  not  exceeding  100  feet,  and  to  be  paid  therefor  at  the  rate  of 
65  cents  per  square  yard.  The  court  finds  that  Roy  prosecuted  the 
work  under  the  contract  during  the  year  1880,  but  his  progress  not 
being  satisfactory  to  the  engineer  ofificers,  the  contract  was  formally 
annulled  and  the  bondsmen  notified,  as  stated  in  the  petition.  In 
March,  1881,  Behan,  the  claimant,  gave  notice  to  Maj.  Howell  that  he 
would  undertake  the  work,  and  at  his  request  the  major  gave  him  a 
description  of  the  work  to  be  done,  estimated  as  not  exceeding  77,000 
or  80,000  square  yards,  which,  at  the  contract  price,  would  amount  to 
from  $50,000  to  $52,000. 

The  court  further  finds  as  follows :  "The  contract  was  of  such  a 
character  as  to  require  extensive  preparations  and  a  large  initial  ex- 
penditure. The  claimant  made  the  necessary  preparations  for  carrying 
on  the  work  to  completion,  and  in  procuring  boats,  tools,  materials, 
and  apparatus  for  its  prosecution.  He  engaged  actively  in  carrying 
out  the  contract  on  his  part,  incurred  large  expenditure  for  labor  and 
materials,  and  had  for  some  time  proceeded  with  the  work  when  the 
undertaking  was  abandoned  by  the  defendants  and  the  work  stopped, 
without  fault  of  the  claimant,  as  set  forth  in  the  following  letters." 
Then  follows  a  copy  of  correspondence  between  the  officers  and  the 
department  of  engineers,  showing  that  a  board  of  engineer  officers 
was  appointed  to  examine  and  report  upon  the  plan  of  improvement 
under  which  the  work  of  the  claimant  was  being  carried  on,  and  that 
this  board,  on  the  twenty-third  of  September,  1881,  reported  their 
unanimous  opinion  that  the  object  sought  to  be  accomplished  by  the 
improvement  had  not  been  attained,  and  that  under  the  then  existing 
plan  of  operations  it  could  not  be  attained.     On  the  twenty-ninth  of 


REMEDIES   ON   BEEACH   OF   CONTRACT  411 

September,  1881,  the  claimant  received  notice  to  discontinue  the  work, 
which  he  did  at  once,  and  gave  Maj.  Howell  notice  to  that  effect,  and 
called  his  attention  to  the  exposed  situation  of  the  machinery,  mate- 
rials, and  other  property  on  hand,  and  requested  instructions  respect- 
ing the  same.    No  instructions  appear  to  have  been  given. 

The  court  then  finds  as  follows : 

"The  claimant  thereupon  closed  up  his  work  and  sold  the  materials 
which  he  had  on  hand.  Nothing  has  been  paid  to  him  for  work,  ma- 
terials, or  losses.  The  actual  and  reasonable  expenditures  by  the 
claimant  in  the  prosecution  of  his  work,  together  with  his  unavoidable 
losses  on  the  materials  on  hand  at  the  time  of  the  stoppage  by  the  de- 
fendants, were  equal  to  the  full  amount  claimed  therefor  in  his  pe- 
tition— $33,192.20.  It  does  not  appear  from  the  evidence  thereon  on 
the  one  side  and  the  other  whether  or  not  the  claimant  would  have 
made  any  actual  profit  over  and  above  expenditures,  or  would  have 
incurred  actual  loss  had  he  continued  the  work  to  the  end  and  been 
paid  the  full  contract  price  therefor. 

"Conclusion  of  Law.  Upon  the  foregoing  findings  of  facts  the 
court  decides  as  a  conclusion  of  law  that  the  claimant  is  entitled  to 
recover  the  sum  of  $33,192.20." 

The  government  has  appealed  from  this  decree,  and  complains  of 
the  rule  of  damages  adopted  by  the  court  below.  Counsel  contend 
that,  by  making  a  claim  for  profits,  the  claimant  asserts  the  existence 
of  the  contract  as  opposed  to  its  rescission;  and  that  in  such  case 
the  rule  of  damages,  as  settled  in  Speed's  Case,  8  Wall.  17,  19  L. 
Ed.  449,  is  "the  difference  between  the  cost  of  doing  the  work  and 
what  claimants  were  to  receive  for  it,  making  reasonable  deduction 
for  the  less  time  engaged,  and  for  release  from  the  care,  trouble,  risk, 
and  responsibility  attending  a  full  execution  of  the  contract."  And 
when  such  a  claim  is  made,  they  contend  that  the  burden  of  proof  is 
on  the  claimant  to  show  what  the  profits  would  have  been;  and  as 
the  court  of  claims  expressly  finds  that  it  does  not  appear  from  the 
evidence  whether  or  not  the  claimant  would  have  made  any  profits,  or 
would  have  incurred  loss,  therefore  the  claimant  was  not  entitled  tn 
judgment  for  any  amount  whatever. 

The  manner  in  which  the  subject  was  viewed  by  the  court  of 
claims  is  shown  by  the  following  extract  from  its  opinion:  "What- 
ever rule  may  be  adopted  in  calculating  the  damages  to  a  contractor 
when,  without  his  fault,  the  other  party,  during  its  progress,  puts  an 
end  to  the  contract  before  completion,  the  object  is  to  indemnify  him 
for  his  losses  sustained  and  his  gains  prevented  by  the  action  of  the 
party  in  fault,  viewing  these  elements  with  relation  to  each  other 
The  profits  and  los.ses  must  be  determined  according  to  the  circum- 
stances of  the  case  and  the  subject-matter  of  the  contract.  The  rea- 
sonable expenditures  already  incurred,  the  unavoidable  losses  incident 
to  stoppage,  the  progress  attained,  the  unfinished  part,  and  the  prob- 
able cost  of  its  completion,  the  whole  contract  price,  and  the  cstiuiated 


412  DISCHARGE   OF   CONTRACT 

pecuniary  result,  favorable  or  unfavorable  to  him,  had  he  been  per- 
mitted or  required  to  go  on  and  complete  his  contract,  may  be  taken 
in  consideration.  Sickels'  Case,  1  Ct.  CI.  214;  Speed's  Case,  2  Ct.  CI. 
429,  affirmed  on  appeal  8  Wall.  77,  19  L.  Ed.  449,  and  7  Ct.  CI.  93 ; 
Wilder's  Case,  5  Ct.  CI.  468;  Bulkley's  Case,  7  Ct.  CI.  543,  19  Wall. 
V7,  22  L.  Ed.  62,  and  9  Ct.  CI.  81 ;  Parish's  Case,  100  U.  S.  500,  25 
I.  Ed.  763 ;  Field's  Case,  16  Ct.  CI.  434 ;  Moore  &  Krone's  Case,  17 
Ct.  CI.  17;  Power's  Case,  18  Ct.  CI.  263,  decided  at  this  term;  Mas- 
terton  v.  City  of  Brooklyn,  7  Hill  (N.  Y.)  71,  42  Am.  Dec.  38.  The 
amount  of  the  claimant's  unavoidable  expenditures  and  losses  already 
incurred  are  set  forth  in  the  findings.  But  we  can  give  him  nothing 
on  account  of  prospective  profits,  because  none  have  been  proved.  So, 
for  the  same  reason,  we  can  deduct  nothing  from  his  expenditures  on 
account  of  prospective  losses  which  he  might  have  incurred  had  he 
not  been  relieved  from  completing  his  contract.  This  leaves  his  ex- 
penditures as  the  only  damage  proved  to  have  resulted  to  him  from 
the  defendant's  breach  of  contract,  and  are,  therefore,  the  proper 
measure  of  damages  under  all  the  circumstances  of  the  case." 

We  think  that  these  views,  as  applied  to  the  case  in  hand,  are  sub- 
stantially correct.  The  claimant  has  not  received  a  dollar,  either  for 
what  he  did,  or  for  what  he  expended,  except  the  proceeds  of  the 
property  which  remained  on  his  hands  when  the  performance  of  the 
contract  was  stopped.  Unless  there  is  some  artificial  rule  of  law  which 
has  taken  the  place  of  natural  justice  in  relation  to  the  measure  of 
damages,  it  would  seem  to  be  quite  clear  that  the  claimant  ought  at 
least  to  be  made  whole  for  his  losses  and  expenditures.  So  far  as 
appears,  they  were  incurred  in  the  /air  endeavor  to  perform  the  con- 
tract which  he  assumed.  If  they  were  foolishly  or  unreasonably  in- 
curred, the  government  should  have  proven  this  fact.  It  will  not  be 
presumed.  The  court  finds  that  his  expenditures  were  reasonable. 
The  claimant  might  also  have  recovered  the  profits  of  the  contract  if 
he  had  proven  that  any  direct,  as  distinguished  from  speculative,  prof- 
its would  have  been  realized.  But  this  he  failed  to  do ;  and  the  court 
below  very  properly  restricted  its  award  of  damages  to  his  actual  ex- 
penditures and  losses. 

The  prima  facie  measure  of  damages  for  the  breach  of  a  contract  is 
the  amount  of  the  loss  which  the  injured  party  has  sustained  thereby. 
If  the  breach  consists  in  preventing  the  performance  of  the  contract, 
without  the  fault  of  the  other  party,  who  is  willing  to  perform  it,  the 
loss  of  the  latter  will  consist  of  two  distinct  items  or  grounds  of  dam- 
age, namely, — First,  what  he  has  already  expended  towards  perform- 
ance, (less  the  value  of  materials  on  hand;)  secondly,  the  profits  that 
he  would  realize  by  performing  the  whole  contract.  The  second  item, 
profits,  cannot  always  be  recovered.  They  may  be  too  remote  and 
speculative  in  their  character,  and  therefore  incapable  of  that  clear 
and  direct  proof  which  the  law  requires.    But  when,  in  the  language 


REMEDIES    ON    BREACH    OF   CONTRACT  413 

of  Chief  Justice  Nelson,  in  the  case  of  Masterton  v.  Mayor  of  Brook- 
lyn, 7  Hill  (N.  Y.)  69,  42  Am.  Dec.  38,  they  are  "the  direct  and  im- 
mediate fruits  of  the  contract,"  they  are  free  from  this  objection; 
they  are  then  "part  and  parcel  of  the  contract  itself,  entering  into  and 
constituting  a  portion  of  its  very  elements ;  something  stipulated  for, 
the  right  to  the  enjoyment  of  which  is  just  as  clear  and  plain  as  to 
the  fulfillment  of  any  other  stipulation."  Still,  in  order  to  furnish  a 
ground  of  recovery  in  damages,  they  must  be  proved.  If  not  proved, 
or  if  they  are  of  such  remote  and  speculative  character  that  they  can- 
not be  legally  proved,  the  party  is  confined  to  his  loss  of  actual  out- 
lay and  expense.  This  loss,  however,  he  is  clearly  entitled  to  recover 
in  all  cases,  unless  the  other  party,  who  has  voluntarily  stopped  the 
performance  of  the  contract,  can  show  the  contrary. 

The  rule,  as  stated  in  Speed's  Case,  is  only  one  aspect  of  the  gen- 
eral rule.  It  is  the  rule  as  applicable  to  a  particular  case.  As  before 
stated,  the  primary  measure  of  damages  is  the  amount  of  the  party's 
loss;  and  this  loss,  as  we  have  seen,  may  consist  of  two  heads  or 
classes  of  damage — actual  outlay  and  anticipated  profits.  But  failure 
to  prove  profits  will  not  prevent  the  party  from  recovering  his  losses 
for  actual  outlay  and  expenditure.  If  he  goes  also  for  profits,  then  the 
rule  applies  as  laid  down  in  Speed's  Case,  and  his  profits  will  be  meas- 
ured by  "the  difference  between  the  cost  of  doing  the  work  and  what 
he  was  to  receive  for  it,"  etc.  The  claimant  was  not  bound  to  go  for 
profits,  even  though  he  counted  for  them  in  his  petition.  He  might 
stop  upon  a  showing  of  losses.  The  two  heads  of  damage  are  dis- 
tinct, though  closely  related.  When  profits  are  sought  a  recovery  for 
outlay  is  included  and  something  more.  That  something  more  is  the 
profits.  If  the  outlay  equals  or  exceeds  the  amount  to  be  received, 
of  course  there  can  be  no  profits.  When  a  party  injured  by  the  stop- 
page of  a  contract  elects  to  rescind  it,  then,  it  is  true,  he  cannot  re- 
cover any  damages  for  a  breach  of  the  contract,  either  for  outlay  or 
for  loss  of  profits ;  he  recovers  the  value  of  his  services  actually  per- 
formed as  upon  a  quantum  meruit.  There  is  then  no  question  of 
losses  or  profits.  But  when  he  elects  to  go  for  damages  for  the  breach 
of  the  contract,  the  first  and  most  obvious  damage  to  be  shown  is  the 
amount  which  he  has  been  induced  to  expend  on  the  faith  of  the  con- 
tract, including  a  fair  allowance  for  his  own  time  and  services.  If 
he  chooses  to  go  further,  and  claims  for  the  lofes  of  anticipated  profits, 
he  may  do  so,  subject  to  the  rules  of  law  as  to  the  character  of  profits 
which  may  be  thus  claimed.  It  does  not  lie,  however,  in  the  mouth 
of  the  party,  who  has  voluntarily  and  wrongfully  put  an  end  to  the 
contract,  to  say  that  the  party  injured  has  not  been  damaged  at  least 
to  the  amount  of  what  he  has  been  induced  fairly  and  in  good  faith 
to  lay  out  and  expend,  (including  his  own  services,)  after  making 
allowance  for  the  value  of  materials  on  hand ;  at  least  it  does  not  lie 
in  the  mouth  of  the  party  in  fault  to  say  this,  unless  he  can  show  that 


414  DISCHARGE  OF  CONTRACT 

the  expenses  of  the  party  injured  have  been  extravagant,  and  unnec- 
essary for  the  purpose  of  carrying  out  the  contract. 

It  is  unnecessary  to  review  the  authorities  -on  this  subject.  Some  of 
them  are  referred  to  in  the  extract  made  from  the  opinion  of  the 
court  below;  others  may  be  found  referred  to  in  Sedgwick  on  the 
Measure  of  Damages,  and  in  Smith's  Leading  Cases,  vol.  2,  p.  36,  etc., 
(notes  to  Cutter  v.  Powell;)  Add.  Cont.  §§  881,  897.  The  cases 
usually  referred  to,  and  which,  with  many  others,  have  been  carefully 
examined,  are,  Planche  v.  Colburn,  5  Car.  &  P.  58;  S.  C.  8  Bing.  14; 
Masterton  v.  Mayor  of  Brooklyn,  7  Hill  (N.  Y.)  61,  42  Am.  Dec.  38; 
Goodman  v.  Pocock,  15  Q.  B.  576;  Hadley  v.  Baxendale,  9  Ex.  341 ; 
Fletcher  v.  Tayleur,  17  C.  B.  21;  Smeed  v.  Foord,  1  El.  &  El.  602; 
Inchbald  v.  Western  Coffee  Co.,  17  C.  B.  (N.  S.)  733;  Griffin  v.  Colver, 
16  N.  Y.  489,  69  Am.  Dec.  718,  and  the  case  of  U.  S.  v.  Speed, 
supra. 

It  is  to  be  observed  that  when  it  is  said  in  some  of  the  books  that 
where  one  party  puts  an  end  to  the  contract  the  other  party  cannot 
sue  on  the  contract,  but  must  sue  for  the  work  actually  done  under 
it,  as  upon  a  quantum  meruit ;  this  only  means  that  he  cannot  sue  the 
party  in  fault  upon  the  stipulations  contained  in  the  contract,  for  he 
"himself  has  been  prevented  from  performing  his  own  part  of  the  con- 
tract upon  which  the  stipulations  depend.  But,  surely,  the  willful 
and  wrongful  putting  an  end  to  a  contract,  and  preventing  the  other 
party  from  carrying  it  out,  is  itself  a  breach  of  the  contract  for 
which  an  action  will  lie  for  the  recovery  of  all  damage  which  the  in- 
jured party  has  sustained.  The  distinction  between  those  claims  un- 
der a  contract  which  result  from  a  performance  of  it  on  the  part  of 
the  claimant,  and  those  claims  under  it  which  result  from  being  pre- 
vented by  the  other  party  from  performing  it,  has  not  always  been 
attended  to.  The  party  who  voluntarily  and  wrongfully  puts  an  end 
to  a  contract,  and  prevents  the  other  party  from  performing  it,  is  es- 
topped from  denying  that  the  injured  party  has  not  been  damaged  to 
the  extent  of  his  actual  loss  and  outlay  fairly  incurred. 

The  particular  form  of  the  petition  in  this  case  ought  not  to  pre- 
clude the  claimant  from  recovering  what  was  fairly  shown  by  the  ev- 
idence to  be  the  damage  sustained  by  him.  Though  it  is  true  that  he 
does  pray  judgment  for  damages  arising  from  loss  of  profits,  yet  he 
also  prays  judgment  for  the  amount  of  his  outlay  and  expenses,  less 
the  amount  realized  from  the  sale  of  materials  on  hand.  The  claim 
for  profits,  if  not  sustained  by  proof,  ought  not  to  preclude  a  recovery 
of  the  claim  for  losses  sustained  by  outlay  and  expenses.  In  a  pro- 
ceeding Hke  the  present,  in  which  the  claimant  sets  forth  by  way  of 
petition  a  plain  statement  of  the  facts  without  technical  formality, 
and  prays  relief  either  in  a  general  manner,  or  in  an  alternative  or 
cumulative  form,  the  court  ought  not  to  hold  the  claimant  to  strict 
technical  rules  of  pleading,  but  should  give  to  his  statement  a  liberal 
interpretation,  and  afford  him  such  relief  as  he  may  show  himself  sub- 


REMEDIES   OX   BREACH   OF  CONTRACT  415 

stantially  entitled  to  if  within  the  fair  scope  of  the  claim  as  exhibited 
by  the  facts  set  forth  in  the  petition. 

We  think  that  the  judgment  of  the  court  of  claims  was  right,  and 
it  is  affirmed. 


2.  Specific  Performance 


WM.  ROGERS  MFG.  CO.  v.  ROGERS. 

(Supreme  Court  of  Errors  of  Connecticut,  1S90.     58  Conn.  356,  20  Atl.  4G7, 
7  L.  R.  A.  779,  IS  Am.  St.  Rep.  278.) 

This  was  a  suit  to  enjoin  the  violation  of  a  contract  between  Frank 
W.  Rogers  and  the  Wm.  Rogers  Manufacturing  Company  and  the 
Rogers  Cutlery  Company  as  follows: 

"(1)  That  said  companies  will  employ  said  Rogers  in  the  business 
to  be  done  by  said  companies,  according  to  the  stipulations  of  said 
agreement,  for  the  period  of  twenty-five  years  therein  named,  if  said 
Rogers  shall  so  long  live  and  discharge  the  duties  devolved  upon  him 
by  said  Watrous  as  general  agent  and  manager  of  the  business  to  be 
done  in  common  by  said  companies,  under  the  directions  and  to  the 
satisfaction  of  said  general  agent  and  manager;  it  being  understood 
that  such  duties  may  include  traveling  for  said  companies,  whenever, 
in  the  judgment  of  said  general  agent,  the  interest  of  the  business  will 
be  thereby  promoted. 

"(2)  The  said  companies  agree  to  pay  said  Rogers  for  such  services 
so  to  be  rendered,  at  the  rate  of  $1,000  per  year  for  the  first  five  years 
of  such  services,  and  thereafter  the  same  or  such  larger  salary  as 
may  be  agreed  upon  by  said  Rogers  and  the  directors  of  said  com- 
panies, saidi  salary  to  be  in  full  during  said  term  of  all  services  to 
be  rendered  by  said  Rogers,  whether  as  an  employe  or  an  officer  of 
said  companies,  unless  otherwise  agreed. 

"(3)  The  said  Rogers,  in  consideration  of  the  foregoing,  agrees  that 
he  will  remain  with  and  serve  said  companies  under  the  direction  of 
said  Watrous,  as  general  agent  and  manager,  including  such  duties  as 
traveling  for  said  companies,  as  said  general  agent  may  devolve  upon 
him,  including  also  any  duties  as  secretary  or  other  officer  of  either 
or  both  of  said  companies,  as  said  companies  may  desire  to  have  him 
perform  at  the  salary  hereinbefore  named  for  the  first  five  years  and 
at  such  other  or  further  or  different  compensation  thereafter  durin<:^ 
the  remainder  of  the  twenty-five  years  as  he,  the  said  Rogers,  and  tlie 
said  companies  may  agree  upon. 

"(4)  The  said  Rogers  during  said  term  stipulates  and  agrees  that 
he  will  not  be  engaged  or  allow  his  name  to  be  employed  in  any  man- 


41G  DISCHARGE  OF   CONTRACT 

ncr  in  any  other  hardware,  cutlery,  flatware,  or  hollow-ware  business 
either  as  manufacturer  or  seller,  but  will  give,  while  he  shall  be  so 
employed  by  said  companies,  his  entire  time  and  services  to  the  inter- 
ests of  said  common  business,  diminished  only  by  sickness,  and  such 
reasonable  absence  for  vacations  or  otherwise  as  may  be  agreed  upon 
between  him  and  said  general  agent." 

The  complaint  was  held  insufficient,  and  the  plaintiffs  appealed. 

Andrews,  C.  J.  Contracts  for  personal  service  are  matters  for 
courts  of  law,  and  equity  will  not  undertake  a  specific  performance. 
2  Kent,  Comm.  258,  note  b;  Hamblin  v.  Dinnefordl,  2  Edw.  Ch.  (N. 
Y.)  529;  Sanquirico  v.  Benedetti,  1  Barb.  (N.  Y.)  315;  Haight  v. 
Badgeley,  15  Barb.  (N.  Y.)  499;  De  Rivafinoli  v.  Corsetti,  4  Paige, 
(N.  Y.)  264,  25  Am.  Dec.  532.  A  specific  performance  in  such  cases 
is  said  to  be  impossible  because  obedience  to  the-  decree  cannot  be 
compelled  by  the  ordinary  processes  of  the  court.  Contracts  for  per- 
sonal acts  have  been  regarded  as  the  most  familiar  illustrations  of 
this  doctrine,  since  the  court  cannot  in  any  direct  manner  compel  the 
party  to  render  the  service. 

The  courts  in  this  country  and  in  England  formerly  held  that  they 
could  not  negatively  enforce  the  specific  performance  of  such  con- 
tracts by  means  of  an  injunction  restraining  their  violation.  3  Wait, 
Act.  &  Def.  754;  Marble  Co.  v.  Ripley,  10  Wall.  340,  19  L.  Ed.  955; 
Burton  v.  Marshall,  4  Gill  (Md.)  487,  45  Am.  Dec.  171 ;  De  Pol  v. 
Sohlke,  7  Rob.  (N.  Y.)  280;  Kemble  v.  Kean,  6  Sim.  333;  Baldwin 
V.  Society,  9  Sim.  393;  Fothergill  v.  Rowland,  L.  R.  17  Eq.  132. 
The  courts  in  both  countries  have,  however,  receded  somewhat  from 
the  latter  conclusion,  and  it  is  now  held  that  where  a  contract  stipu- 
lates for  special,  unique,  or  extraordinary  personal  services  or  acts, 
or  where  the  services  to  be  rendered  are  purely  intellectual,  or  are 
peculiar  and  individual  in  their  character,  the  court  will  grant  an  in- 
junction in  aid  of  a  specific  performance.  But  where  the  services 
are  material  or  mechanical,  or  are  not  peculiar  or  individual,  the  party 
will  be  left  to  his  action  for  damages.  The  reason  seems  to  be  that 
services  of  the  former  class  are  of  such  a  nature  as  to  preclude  the 
possibility  of  giving  the  injured  party  adequate  compensation  in  dam- 
ages, while  the  loss  of  services  of  the  latter  class  can  be  adequately 
.  compensated  by  an  action  for  damages.  2  Story,  Eq.  Jur.  §  958a ;  3 
Wait,  Act.  &  Def.  754 ;  3  Pom.  Eq.  Jur.  §  1343 ;  California  Bank  v. 
Fresno  Canal,  etc.,  Co.,  53  Cal.  201 ;  Singer  Sewing-Machine  Co. 
v.  Union  Button-Hole  Co.,  1  Holmes,  253,  Fed.  Cas.  No.  12,904; 
Lumley  v.  Wagner,  1  De  Gex,  M.  &  G.  604;  Railroad  Co.  v.  Wythes, 
5  De  Gex,  M.  &  G.  880;   Montague  v.  Flockton,  L.  R.  16  Eq.  189. 

The  contract  between  the  defendant  and  the  plaintiffs  is  made  a  part 
of  the  complaint.  The  services  which  the  defendant  was  to  perform 
for  the  plaintiffs  are  not  specified  therein,  otherwise  than  that  they 
were  to  be  such  as  should  be  dievolved  upon  him  by  the  general  man- 
ager;   "it  being  understood  that  such  duties  may  include  traveling 


REMEDIES   ON   BPEACH   OF   CONTRACT  417 

for  said  companies  whenever,  in  the  judgment  of  said  general  agent, 
the  interests  of  the  business  will  be  thereby  promoted ;"  and  also  "in- 
cluding such  duties  as  traveling  for  said  companies  as  said  general 
agent  may  devolve  upon  him,  including  also  any  duties  as  secretary 
or  other  officer  of  either  or  both  of  said  companies  as  said  companies 
may  desire  to  have  him  perform."  These  services,  while  they  may  not 
be  material  and  mechanical,  are  certainly  not  purely  intellectual,  nor 
are  they  special,  or  unique,  or  extraordinary ;  nor  are  they  so  peculiar 
or  individual  that  they  couldl  not  be  performed  by  any  person  of  or- 
dinary intelligence  and  fair  learning.  If  this  was  all  there  was  in  the 
contract  it  would  be  almost  too  plain  for  argument  that  the  plaintiffs 
should  not  have  an  injunction. 

The  plaintiffs,  however,  insist  that  the  negative  part  of  the  con- 
tract, by  which  the  defendant  stipulated  and  agreed  that  he  would 
not  be  engaged  in  or  allow  his  name  to  be  employed  in  any  manner 
in  any  other  hardware,  cutlery,  flatware  or  hollow-ware  business, 
either  as  a  manufacturer  or  seller,  fully  entitles  them  to  an  injunction 
against  its  violation.  They  aver  in  the  complaint,  on  information  and 
belief,  that  the  defendant  is  planning  with  certain  of  their  competitors 
to  engage  with  them  in  business,  with  the  intent  and  purpose  of  al- 
lowing his  name  to  be  used  or  employed  in  connection  with  such 
business  as  a  stamp  on  the  ware  manufactured ;  and  they  say  such 
use  would  do  them  great  and  irreparable  injury.  If  the  plaintiffs 
owned  the  name  of  the  defendant  as  a  trade-mark,  they  could  have 
no  difficulty  in  protecting  their  ownership ;  but  they  make  no  such 
claim,  and  all  arguments  or  analogies  drawn  from  the  law  of  trade- 
marks may  be  laid  wholly  out  of  the  case. 

There  is  no  averment  in  the  complaint  that  the  plaintiffs  are  en- 
titled to  use,  or  that  in  fact  they  do  use,  the  name  of  the  defendant 
as  a  stamp  on  the  goods  of  their  own  manufacture,  nor  any  averment 
that  such  use,  if  it  exists,  is  of  any  value  to  them.  So  far  as  the  court 
is  informed,  the  defendant's  name  on  such  goods  as  the  plaintiffs  man- 
ufacture is  of  no  more  value  than  the  names  of  Smith  or  Stiles  or 
John  Doe.  There  is  nothing  from  which  the  court  can  see  that  the 
use  of  the  defendant's  name  by  the  plaintiffs  is  of  any  value  to  them, 
or  that  its  use  as  a  stamp  by  their  competitors  would  do  them  any  in- 
jury other  than  such  as  might  grow  out  of  a  lawful  business  rivalry. 
If  by  reason  of  extraneous  facts  the  name  of  the  defendant  does  have 
some  special  and  peculiar  value  as  a  stamp  on  their  goodL<;,  or  its  use 
as  a  stamp  on  goods  manufactured  by  their  rivals  would  do  them  some 
special  injury,  such  facts  ought  to  have  been  set  out  so  that  the  court 
might  pass  upon  them.  In  the  absence  of  any  allegation  of  such  facts 
we  must  assume  that  none  exist. 

The  plaintiffs  also  aver  that  the  defendant  intenfls  to  make  known 
to  their  rivals  the  knowledge  of  their  l)usincss,  of  their  customers,  etc., 
which  he  has  obtained  while  in  their  employ.  But  here  they  have 
TnuocKM.CoNT. — 27 


418  DISCHARGE   OF   CONTRACT 

not  shown  facts  which  bring  the  case  within  any  rule  that  would  re- 
quire an  employe  to  be  enjoined  from  disclosing  business  secrets  which 
he  has  learned  in  the  course  of  his  employment,  and  which  he  has  con- 
tracted not  to  divulge.  Peabody  v.  Norfolk,  98  Mass.  452,  96  Am. 
Dec.  664. 

There  is  no  error  in  the  judgment  of  the  superior  court.    The  other 
judges  concurred. 


3.  Discharge  of  Right  of  Action 
(A)  By  Accord  and  Satisfaction 


HARRISON  V.  HENDERSON. 

(Supreme  Court  of  Kansas,  1903.    67  Kan.  194,  72  Pac.  875,  62  L.  R.  A.  760, 

100  Am.  St.   Rep.  3S6.) 

Action  by  Harvey  Henderson,  administrator,  against  T.  W.  Harri- 
son.    Judgment  for  plaintiff,  and  defendant  brings  error.     Affirmed. 

Henderson  was  a  resident  of  Pittsburg,  Pa.,  and  was  appointed 
administrator  of  the  estate  of  Samantha  Johnson,  deceased,  by  the 
court  there.  As  such  administrator,  he  hadi  for  collection  two  notes 
secured  by  mortgages  in  Topeka.  He  employed  Harrison,  who  is  an 
attorney  residing  in  Topeka,  for  the  purpose  of  collecting  these  notes 
by  foreclosure.  The  account  growing  out  of  that  relationship  con- 
tinued from  May,  1894,  until  March,  1898,  during  which  time  the 
administrator  remitted  various  sums  of  money  to  apply  on  fees  and 
expenses,  and  Harrison  made  collections,  so  that  altogether  there 
came  to  his  hands  $1,210.  He  expended!  various  sums  in  payment  of 
taxes,  etc.,  and  on  March  10,  1898,  made  a  statement  to  Henderson  of 
the  account  embracing  these  expenditures  and  charges  for  attorney's 
fees,  in  the  total  sum,  as  then  claimed  by  him,  of  $739.20,  and  on  that 
date,  as  shown  by  this  account,  struck  a  balance  of  $470.30,  and  re- 
mitted the  same  by  draft.  This  draft  was  drawn  to  Harrison's  order, 
and  indorsed  by  him,  "Pay  Harvey  Henderson  Administrator  estate 
of  Samantha  Johnson  dec'd.  bal.,"  and  sent  to  Henderson,  accompa- 
nied by  a  letter  in  which  he  said :  "I  enclose  you  statement  in  the 
Samantha  Johnson  estate  matters  and  draft  on  N.  Y.  for  balance 
of  $470.30  on  that  matter."  This  draft  Henderson  collected,  but,  re- 
fusing to  consider  it  as  a  payment  in  full,  he,  in  September,  1899, 
brought  this  action  upon  account  for  moneys  had  and  received,  giv- 
ing therein  credit  for  the  expenditures — $125  as  attorney's  fees  and 
the  amount  of  the  remittance — and  prayed  judgment  for  a  balance  of 
$366. 


REMEDIES   ON    BREACH    OF   CONTRACT  419 

Harrison  answered,  setting  up  the  facts  relative  to  the  remittance 
as  hereinbefore  mentioned,  and  pleaded  the  same  as  an  accord  and 
satisfaction.  Plaintiff  replied,  admitting  the  receipt  of  the  statement, 
but  denied  the  correctness  of  the  account  as  pleaded  by  the  defendant. 
The  matter  was  referred  by  consent  to  Hon.  J.  D.  McFarland  to  re- 
port upon  the  facts  and  the  law.  Upon  the  hearing  before  the  referee, 
the  entire  matter  as  to  the  correctness  of  the  charges  made  by  the  de- 
fendant Harrison  for  his  services  as  attorney  was  gone  into,  and 
evidence  heard  pro  and  con.  The  referee  reported  that  the  charges 
as  made  bv  him  were  excessive,  and  that  he  owed  to  the  plaintiff  the 
sum  of  $235,  with  interest  from  September  9,  1898,  and,  as  a  conclu- 
sion of  law,  that  "the  retention  and  collection  of  the  draft  for  $470.30 
sent  by  the  defendant  to  the  plaintiff  March  10th,  1898,  together  with 
the  letter  and  statement  therewith,  was  not  under  the  facts  of  this 
case  an  accord  and  satisfaction,  or  the  settlement  of  the  matters  be- 
tween plaintiff  and  defendant  mentioned  in  said  statement,  and  does 
not  bar  the  plaintiff  from  recovering  any  sum  that  otherwise  would  be 
due  him  on  account  of  said  matters,"  and,  further,  that  he  recover 
said  sum  of  $235  found  due.  This  report  of  the  referee  was  confirmed 
by  the  district  court  over  the  objections  of  the  defendant,  and  judg- 
ment rendered  thereon  against  defendant,  who  is  now  here  seeking 
a  reversal  of  the  same. 

Cunningham,  J.  (after  stating  the  facts).  There  are  two  questions 
raised  by  the  plaintiff  in  error : 

(1)  One  upon  the  facts,  it  being  claimed  that  the  report  of  the  ref- 
eree and  judgment  of  the  district  court  upon  the  facts  is  not  binding 
upon  this  court,  and  that,  as  all  of  the  evidence  introduced  before  the 
referee  is  in  the  record  here,  we  may  look  into  it  as  though  we  were 
trying  the  case  de  novo,  and  that  upon  doing  so  we  will  come  to  a 
conclusion  other  and  different  than  did  the  referee  and  trial  court. 
Granting  that  the  findings  of  the  referee  and  their  approval  by  the 
district  court  are  not  binding  here,  we  have  looked  into  the  evidence 
enough  to  enable  us  to  conclude  that  the  findings  are  fully  warranted 
thereby,  and  are  such  as  meet  with  our  approval. 

(2)  The  main  contention  in  the  case  is  that  there  was  an  accord 
upon  and  a  satisfaction  of  the  demands  arising  between  the  parties 
in  this  case.  That  inasmuch  as  the  account  submitted  on  the  lOlh  day 
of  March,  1898,  struck  what  was  denominated  therein  as  a  "balance." 
and  as  the  indorsement  upon  the  draft  indicated  that  it  was  for  such 
balance,  and  as  the  letter  accompanying  the  same  contained  the  sug- 
gestion that  a  balance  was  therein  remitted,  as  a  matter  of  law  Hen- 
derson could  not  accept  such  draft  under  these  circumstances  and 
afterwards  claim  a  further  payment. 

An  accord  is  an  agreement,  an  adjustment,  a  settlement  of  former 
difficulty,  and  presupposes  a  difference,  a  disagreement,  as  to  what  is 
right.    A  satisfaction,  in  its  legal  significance  in  this  connection,  is  a 


420  DISCHARGE  OF  CONTRACT 

performance  of  the  terms  of  the  accord.  If  such  terms  required  a 
payment  of  a  sum  of  money,  then  that  such  payment  has  been  made. 

In  this  case  there  is  no  evidence  of  any  disagreement  between  the 
parties  prior  to  the  sending  of  the  account  and  remittance  accompany- 
ing it.  Plaintiff  in  error  contends,  however,  that,  because  such  remit- 
tance was  denominated  "a  balance,"  its  acceptance  constituted  an 
accord  and  satisfaction,  and  cites  a  number  of  authorities  where  courts 
have  held  that  a  remittance  made  as  a  balance,  and  the  acceptance,  of 
the  same,  amounted  to  an  accord  and  satisfaction.  These  cases  have 
all  been  carefully  examined,  and  in  every  one  there  appears  to  have 
been  a  prior  disagreement,  a  contention  as  to  what  amount  was  due, 
so  that  a  remittance,  being  denominated  a  balance,  carried  with  it  to 
the  creditor,  as  a  fair  conclusion,  that  it  was  intended  by  the  debtor  to 
be  in  full  of  all  demands.  Without  the  requirement  being  made  by 
the  debtor  that  if  the  creditor  accepts  and  retains  the  proffered  amount 
he  must  do  so  in  full  satisfaction  of  his  demand,  or  without  accom- 
panying and  surrounding  circumstances  fairly  indicating  that  such  was 
the  purpose  and  object  of  the  debtor  in  making  the  remittance,  a  cred- 
itor cannot  be  said  to  have  so  accepted  a  payment.  To  constitute  an  ac- 
cord and  satisfaction  in  law,  dependent  upon  the  offer  of  the  payment 
of  money,  it  is  necessary  that  the  money  should  be  offered  in  full  sat- 
isfaction of  the  demand  or  claim  of  the  creditor,  and  be  accompanied  by 
such  acts  or  declarations  as  amount  to  a  condition  that  if  the  money  is 
accepted  it  is  to  be  in  full  satisfaction,  and  be  of  such  a  character  as 
that  the  creditor  is  bound  to  so  understand  such  offer. 

In  Kingsville  Preserving  Co.  v.  Frank,  87  111.  App.  586,  it  is  held: 
"To  constitute  an  accord  and  satisfaction  of  a  claim  unliquidated  and 
in  dispute,  it  is  necessary  that  the  money  should  be  offered  in  satis- 
faction of  the  claim,  and  the  offer  accompanied  with  such  acts  and 
declarations  as  amount  to  a  condition  that  if  the  money  is  accepted, 
it  is  to  be  in  satisfaction,  and  such  that  the  party  to  whom  it  is  of- 
fered is  bound  to  understand  therefrom  that,  if  he  takes  it,  he  takes 
it  subject  to  such  condition." 

In  Pottlitzer  et  al.  v.  Wesson  et  al.,  8  Ind.  App.  472,  35  N.  E.  1030, 
a  debtor  sent  his  check  in  payment  of  an  account.  It  was  held  that 
this  did  not  necessarily  imply  that  if  the  creditors  accepted  the  check 
they  must  have  understood  that  their  accepting  it  was  in  full  of  their 
claim,  hence  there  was  no  accord  and  satisfaction  thereby  shown. 

In  Perkins  v.  Headley,  49  Mo.  App.  556,  it  was  held:  "Where  a 
controversy  as  to  the  amount  of  the  indebtedness  exists  between  a 
creditor  and  his  debtor,  and  the  debtor  tenders  to  the  creditor  the 
amount  which  he  claims  is  due,  on  condition  that  the  acceptance  of 
it  should  discharge  the  entire  demand,  the  acceptance  will  constitute 
an  accord  and  satisfaction  as  a  matter  of  law,  since  one  who  accepts 
a  conditional  tender  assents  to  the  condition."  But  it  was  held  in  this 
case  "that  the  mere  fact  that  the  plaintiff  received  from  defendant  less 


EEMEDIES   ON   BREACH   OF  CONTRACT  421 

than  the  amount  of  his  claim,  in  silence,  and  with  knowledge  that  de- 
fendant claimed  to  be  indebted  to  him  only  to  the  extent  of  the  pay- 
ment made,  did  not  conclusively  and  as  a  matter  of  law  establish  an 
accord  and  satisfaction." 

In  Beckman  v.  Birchard,  48  Neb.  805,  67  N.  W.  784,  where  a  pay- 
ment of  money  was  made  as  a  balance  due,  and  the  claim  made  that 
this  was  an  accord  and  satisfaction,  it  was  held :  "A  creditor  who  ac- 
cepts money  tendered  by  the  debtor  unconditionally,  does  not  by  that 
act  estop  himself  from  maintaining  an  action  to  recover  any  further 
sum  that  may  be  due." 

In  Kruger  v.  Geer,  26  Misc.  Rep.  772,  56  N.  Y.  Supp.  1015,  an 
attorney  wrote  to  his  client:  "Inclosed  you  will  find  a  statement  of 
account,  my  receipted  bill  for  professional  services  since  our  last  state- 
ment, and  a  check  for  $166.86.  being  the  balance  due  you."  No  oth- 
er indication  being  found  that  this  was  intended  as  full  settlement,  the 
court  held  "that  the  fact  that  plaintiff  retained  the  check  and  receipt- 
ed statement,  where  the  check  contained  no  condition  that  it  should 
be  received  in  full  payment,  is  insufficient  to  show  an  accord  and  sat- 
isfaction." 

It  was  ruled  in  Brigham  v.  Dana,  29  Vt.  1:  "A  sum  of  money 
paid  and  received  will  not  operate  as  a  full  settlement,  although  the 
payer  so  intended  it,  and  would  not  have  paid  it  if  he  had  not  under- 
stood that  such  would  be  its  effect,  but  in  reference  to  which  he  mad€ 
no  such  express  condition,  if  the  payee  did  not  so  understand  it,  and 
would  not  have  received  it  upon  such  an  understanding." 
See,  also,  1  Cyc.  332. 

An  accord  and  satisfaction  is  the  result  of  an  agreement  between 
the  parties,  and,  like  all  other  agreements,  must  be  consummated  by  a 
meeting  of  the  minds  of  the  parties,  accompanied  by  a  sufficient  con- 
sideration. If  the  creditor  is  to  be  held  to  abate  his  claim  against  the 
debtor,  it  must  be  shown  that  he  understood  that  he  was  doing  so 
when  he  received  the  claimed  consideration  therefor.  A  simple  tender 
of  a  balance  as  shown  by  an  account  tendered  by  the  debtor,  does  not 
carry  with  it  an  implication  or  conclusion  that  by  such  tender  the  debt- 
or paid,  or  that  the  creditor  agreed  to  receive,  the  same  in  full  of  the 
amount  due,  where  there  had  been  no  prior  disagreement  or  discus- 
sion as  to  what  was  actually  due. 

Surely  it  cannot  be  claimed  that  such  was  the  condition  in  the  case 
at  bai.  It  was  shown  in  the  evidence  that  the  administrator  had  no 
knowledge  of  fees  properly  chargeable  by  attorneys  in  this  state  for 
services  rendered,  or  that  he  even  knew  of  the  character  and  extent 
of  the  services  which  had  been  rendered.  The  sender  of  the  check  did 
not  require  its  acceptance  in  full  of  all  dcmanrjs  upon  him  as  a  con- 
dition precedent  to  its  acceptance.  The  circumstances  better  warrant 
the  conclusion  that  the  sender  was  saying,  "In  my  judgment  these  fees 
charged  are  correct,  and  a  proper  remuneration  for  the  services  which 


422  DISCHARGE   OF  CONTRACT 

I  have  rendered,  and,  in  accordance  with  this  view,  the  amount  sent 
you  is  the  balance  that  is  due.  If,  however,  after  you  have  investigat- 
ed, you  do  not  so  conclude,  we  will  hereafter  have  an  adjustment  of 
any  difference  that  may  then  arise,"  rather  than,  "I  will  give  you  no 
opportunity  whatever  to  inquire  as  to  the  correctness  of  the  charges 
I  have  made,  and,  if  you  accept  the  draft,  it  must  foreclose  all  ques- 
tion." 

The  former  view  is  most  just  to  the  plaintiff  in  error,  and  it  is  the 
position  tliat  an  honorable  and  fair-minded  attorney  would  take.  Un- 
der our  statute,  he  at  best  was  only  entitled  to  a  lien  upon  the  moneys 
which  had  come  into  his  hands,  by  virtue  of  his  employment,  to  secure 
his  properly  charged  fees.  It  was  his  duty  to  at  once  remit  all  such 
moneys,  less  only  such  properly  charged  fees — if,  indeed,  we  may 
make  this  concession.  He  could  not  be  permitted  to  charge  extor- 
tionate fees,  remit  the  balance  as  per  his  conclusion,  and  estop  his 
client  thereby.  We  are  fully  persuaded  in  this  case  there  was  no  ac- 
cord and  satisfaction,  and  that  the  defendant  in  error  is  entitled  to 
recover  the  amount  found  due  by  the  referee. 

The  judgment  of  the  district  court  will  be  affirmed.  All  the  Justices 
concurring. 


(B)  By  Lapse  of  Time 


WARREN  V.  CLEVELAND  et  al. 

(Supreme  Court  of  Tennessee,  1903.    Ill  Tenn.  174,  76  S.  W.  910,  102 
Am.  St.  Rep.  749.J 

Suit  by  J.  C.  Warren,  as  executor,  etc.,  against  M.  N.  Cleveland 
and  others.  From  a  decree  of  the  Court  of  Chancery  Appeals  for 
defendants,  plaintiff  appeals. 

Neil,  J.  In  the  course  of  administration  of  the  estate  of  D.  H. 
Cleveland  a  controversy  arose  over  the  claim  of  Mrs.  Hudson  for 
about  $1,200. 

It  was  insisted  by  the  executor  that  this  claim  was  barred  by  the 
statute  of  limitations,  and  the  chancellor  found  in  favor  of  this  con- 
tention. 

After  stating  that  the  consideration  of  this  claim  was  the  board- 
ing of  Mrs.  Hudson's  younger  sisters,  and  that  the  justice  of  the  debt 
had  been  proved,  the  Court  of  Chancery  Appeals  found  as  follows : 

"But  we  are  satisfied  from  the  proof  that  her  claim  is  clearly  barred 
by  the  statute  of  limitations,  which  was  interposed  by  the  executor 


REMEDIES   ON    BEEACH   OF   CONTRACT  423 

of  her  father  to  the  allowance  of  the  claim.  It  is  true  there  is  some 
proof  in  the  record,  undisputed,  that  Mr.  Cleveland,  her  father,  rec- 
ognized this  claim  up  till  a  short  time  before  his  death ;  but  the  proof 
fails,  clearly,  we  think,  to  show  that  he  made  any  promise  to  pay  it 
within  six  years  before  h-'s  death." 

Upon  this  finding  of  facts  the  Court  of  Chancery  Appeals  ruled 
the  law  as  follows : 

"The  law  is  that  the  mere  recognition  of  a  claim  or  debt  will  not 
prevent  the  operation  of  the  statute  of  limitation  against  it.  It  re- 
quires not  only  recognition,  but  a  distinct  and  unconditional  prom- 
ise to  pay  it,  to  prevent  the  running  of  the  statute." 

The  point  of  the  assignment  is  that  a  mere  recognition  of  the  debt 
is  sufficient  to  take  the  case  out  of  the  operation  of  the  statute. 

We  have  been  unable  to  find  sufficient  authority  in  our  decisions 
to  support  this  contention.  The  cases  that  come  nearest  to  it  are 
the  following:  Harwell  v.  McCullock,  2  Overt.  275,  278;  Russel  v. 
Gass,  Mart.  &  Y.  271-274;  Partee  v.  Badget,  4  Yerg.  174,  26  Am. 
Dec.  220;  Hunter  v.  Starkes,  8  Humph.  656;  Luna  v.  Edmiston,  5 
Sneed,  160.  All  of  these  cases,  except  Hunter  v.  Starkes,  state,  in 
substance,  that  an  unconditional  acknowledgment  of  the  indebtedness 
is  sufficient  to  remove  the  bar  of  the  statute.  In  the  latter  case  (Hunt- 
er V.  Starkes)  it  is  held  that  an  admission  that  the  amount  claimed  by 
the  contract  has  never  been  paid  is  as  sufficient  for  the  purpose  as  a 
direct  promise  to  pay.  This  case  is  substantially  an  authority  for 
the  position  assumed  by  counsel  for  Mrs.  Hudson,  and  if  it  stood 
alone,  or  even  if  it  stood  only  with  the  other  cases  just  cited,  we 
should  be  content  to  hold  that  a  recognition  of  the  debt  within  six 
years  would  be  sufficient.  But  we  have  a  long  line  of  cases  which 
hold  that,  in  order  to  remove  the  bar  of  the  statute,  there  must  be 
either  an  express  promise  to  pay,  or  an  acknowledgment  of  the  debt 
accompanied  by  the  expression  of  a  willingness  to  pay  it.  Jordan  v. 
Jordan,  85  Tenn.  566,  3  S.  W.  896;  Shown  v.  Hawkins,  85  Tenn. 
216,  2  S.  W.  34;  Malone  v.  Searight,  8  Lea,  91-94;  Fuqua  v.  Din- 
widdie,  6  Lea,  648;  Roller  v.  Bachman,  5  Lea,  156-157;  Bachman 
V.  Roller,  9  Baxt.  409-412,  40  Am.  Rep.  97;  Rogers  v.  Southern,  4 
Baxt.  67-69 ;  McFerrin  v.  Woods,  3  Baxt.  242-247 ;  Allison  v.  Brad- 
ford, 1  Tenn.  Cas.  619-621  ;  Broddie  v.  Johnson,  1  Sneed,  465 ;  But- 
ler V.  Winters,  2  Swan,  92;  Ott  v.  Whitworth,  8  Humph.  494-496; 
Hale  V.  Hale,  4  Humph.  183-185;  Thompson  v.  French,  10  Ycrg. 
456;  Crowder  v.  Nichol,  9  Yerg.  453-455;  Belote  v.  Wynne,  7  Yerg. 
534. 

The  weight  of  authority  is  very  strongly  in  favor  of  the  rule  as 
last  stated.  We  do  not  think  that  a  finding  merely  that  the  deceased 
"recognized  this  claim  up  to  a  short  time  before  his  death"  is  sunicicnt. 
There  would  have  to  be  other  facts  staled,  showing  more  distinctly 
the  character  of  the  recognition,  and  that  it  amounted  cither  to  a  di- 


424  DISCHARGE  OP  CONTRACT 

rect  promise,  or  an  acknowledgment  of  the  existence  of  the   debt, 
coupled  with  an  expression  of  a  willingness  to  pay  it. 

While,  therefore,  we  do  not  fully  agree  with  the  Court  of  Chancery 
Appeals  in  its  statement  of  the  law  that  there  must  be  an  express 
promise  to  pay  in  order  to  take  a  debt  out  of  the  bar  of  the  statute  of 
limitations,  yet,  under  the  authorities  above  cited,  we  are  constrained 
to  hold  that  that  court  reached  a  correct  conclusion  as  to  the  existence 
of  the  bar,  and  that  the  decree  must  be  affirmed. 


ITEST  PDBLISHINe  Ca,   PBENTEBB,   BT.  FAITL,   lUBK 


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